Debenhams Share Discussion Threads

[essentialinvestor] 13/1/2015 10:28

isis, why are they still opening a string of new UK stores,
do you agree with that strategy.

[isis] 13/1/2015 09:23

Debenhams shares fall 9pc after strong Christmas fails to cheer investors
Black Friday did not detract from Christmas sales at department store but investors are still not convinced the store has turned around


Debenhams reported record sales in the week before Christmas Photo: Alamy
By Lauren Davidson7:58AM GMT 13 Jan 2015 CommentsComment
Debenhams' shares slumped as much as 9pc after an upbeat Chritmas trading update failed to allay investors concerns about the department store's profitability.
Shaking off a poor festive season in 2013, Debenhams reported a bumper Black Friday and record group sales in the week before Christmas. But the retailer added that the dominance of "lower margin" items, such as beauty brands, meant the gross margin will be towards the lower end of its previous guidance of a 10 to 40 basis point increase.
Online orders on the day of Black Friday grew by 125pc, with sales across the November week 10.3pc higher as British consumers latched on to the US-born promotional event.
This did not detract from traditional holiday sales. Over the four weeks to 10 January, what the company referred to as “the key Christmas period”, like-for-like sales increased by 4.9pc and online sales jumped by more than a quarter, or 28.9pc.
Michael Sharp, chief executive of Debenhams, said the company’s performance in “the critical Christmas trading weeks” was “driven by our strength in a diverse range of product categories and a strong marketing campaign focussed on gifting.”
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In a December update, analysts at Moodys singled out Debenhams along with New Look and House of Fraser among the retailers expected to report some of the strongest Christmas sales growth in Europe. In 2013, Debenhams’ poor Christmas trading led the company to issue a profits warning on New Year’s Eve.
Mr Sharp added: “Our performance steadily improved following the well documented challenges in the clothing market in the autumn.”
An unseasonably warm September hurt clothing retailers across the board, including Next, Marks & Spencer, Primark and TopShop owner Arcadia.
Mr Sharp also credited Debenhams’ next-day delivery and next-day click-and-collect services, which launched in time for the festive season, for boosting sales, with the former accounting for half of all online orders in the week before Christmas.
A fifth of the company’s sales are now made online, of which 44pc comes from mobile.
Issuing an update on its pledge to cut down on promotions after relying on heavy discounts to shift stock in the past, Debenhams reported that it had 10 fewer days of promotions, which led to a 12.1pc increase in full-price transactions.
Over the seven weeks to 10 January, which includes Black Friday and Christmas, gross transaction value increased by 3.3pc while like-for-like sales grew 2.4pc, boosted by a 11.7pc jump in online sales.
Over the 19-week period, however, which includes the weak autumn season, like-for-like sales dropped by 0.8pc despite a 0.2pc growth in transaction value and a 6pc increase in online sales.
On the back of the record high Christmas week, Debenhams stuck by its previous forecast of a 2pc to 4pc full year growth, following its 24pc decline in its profits in 2014, but said the figure would fall at the lower end of that guidance range.
Debenhams' shares dropped as much as 9pc when markets opened.

[gerry hatrick] 13/1/2015 09:17

The update in general tone was upbeat yet the market punishes.Many are citing the growth in online,yes of course it is growing but particularly as the period in question is the dark cold days before Christmas when many people would prefer to order from the comfort of their armchair.come spring and summer,I would expect shoppers to visit stores as the weather entices people out- especially the ladies.
Looks oversold to me based upon the upbeat attitude of Statement.Will hold and see.

[edmundshaw] 13/1/2015 08:43

Good Xmas trading has pulled up the whole period to OK. Though the 19 weeks are flat on turnover, good sell-through bodes well enough for profitability given decent cost control.

Dividend looks safe for another year approaching 5%, and the strategy for online seems working OK. In particular, the good customer delivery should be good for future business (compare how Amazon gets good sales at higher prices compared to competitors - it is all because of good delivery and returns experience and trust.).

Holding as a (smallish) part of the portfolio.

[essentialinvestor] 13/1/2015 08:35

They are continuing to add new stores, find it difficult to relate to
as more sales migrate online.

[lord gnome] 13/1/2015 08:33

I'm out as well Aleman. This update is a big disappointment. The share price will struggle for some time to come.

[aleman] 13/1/2015 08:27

I was disappointed and I've sold. All the growth is online, leaving bricks and mortar down a bit. The more DEB becomes an online retailer, the more the expense of the big shops will eat into their competitive position. I was hoping the higher density of goods in store would see a return to growth in bricks and mortar but it doesn't look to have happened apart from a few weeks after Christmas and only just. That might be a better trend but I doubt it after DEB got numerous good mentions in media over Christmas so many will have gone to check out the sales. And the comparative last year was poor and the economy must be due a slowdonw after the election.. They really must get sales up or costs down in bricks and mortar or they will have to start some serious closing down. These results suggest they are struggling to achieve their aims. They are not going bust by a long chalk but look to still have difficult times ahead, particularly if the economy weakens at any point, so I'm happy to take my modest short-term profit and watch from the sidelines. Good luck to the rest of you.

[harry_david] 13/1/2015 08:14

This market action if continued invites a takeover bid.

[maurillac] 13/1/2015 08:13

i agree. pity any p.i. selling at the open !
holding on to mine. good yield here
m

[adamb1978] 13/1/2015 08:04

Havent run the numbers however as both costs and gross margins will be at the end of guidance, the net impact at an operating margin level should be somewhat balanced. The sales trend is also positive . Could be far worse

[wllmherk] 13/1/2015 07:59

yep, this bit will be pounced upon,

a challenging season in clothing will result in gross margin being towards the lower end of guidance of +10 to +40 basis points for the year as a whole.

Tight cost control during the period means full yearguidance will be at the lower end of the 2% to 4% increase previously guided. Capex, interest and depreciation guidance remains unchanged.

wllm

[wllmherk] 13/1/2015 07:56

commentators predicting that it will open down as margins squeezed according to BBC twitter feed. May need to wait a bit longer on breaking even :(

wllm

[18bt] 13/1/2015 07:53

Seems a strong update. This could be quite a good year for retailers in general

[wllmherk] 13/1/2015 07:50

I thought so too, but, you never know how the market will react. It would be nice to see the share price get back to the 90p mark, I ve been waiting a long time. That said I have picked up a few chunky dividends whilst waiting.

wllm

[isis] 13/1/2015 07:07

LOOKS VERY GOOD!

[lord gnome] 12/1/2015 15:12

Looks as though the market isn't exactly expecting fireworks from tomorrow's update. Could all be a bit of a damp squib - sadly.

[fizzypop] 08/1/2015 15:22

Divi due tomorrow 9 Jan.

[harry_david] 08/1/2015 11:49

Ted Baker great news. Also Marks problems were self inflicted so a positive sign rather than negative.

[aleman] 08/1/2015 11:24

Strong DEB sales at Kingfisher centre.

[aleman] 08/1/2015 10:22

Ted Baker sales up 22% on space up 9%. This is the most relevant yet as it's a DEB concession! Ted Baker shares are threatening new highs, this morning.

[m4rtinu] 07/1/2015 16:09

ST - perhaps. But whatever, I am trying to force myself to take some profit, by placing an automatic sale price. If DEBs goes back to the recent uptrend, I will have lost out a bit, but in the past I have sat on my hands with shares, when I should have sold (SBRY, CNA).

[simon templar qc] 07/1/2015 15:18

m4

Holders will know soon whether you did the right thing I happen to think you may have.

I also agree with Aleman's view that BOO warning is more likely the fall here rather than Sainsbury's.

[lord gnome] 07/1/2015 15:18

I agree Aleman. Market sentiment will have been affected by the Boohoo RNS. I doubt however that this has any real relevance to DEB's figures. I think / hope that our upward trend will resume tomorrow and that today will prove to have been a simple blip. Like you, I remain confident that DEB's will prove to have been one of the Christmas winners.