Debenhams Share Discussion Threads

[topvest] 06/1/2018 12:31

and John Lewis I suppose. The point is that Debenhams are caught in the middle, a place held much more successfully by M&S and John Lewis (even though they are also in decline). Primark and H&M etc. are very successful at the bottom end. There is still a place for Selfridges and Harrods at the top-end. Debenhams, Beales and House of Fraser have very little to offer. "Department Stores" are clearly out of date. Never fight technological obsolescence is my motto as you always lose!

"A department store is a retail establishment offering a wide range of consumer goods in different product categories known as "departments"."

Amazon does all this and is much much better.

[qantas] 06/1/2018 12:18

topvest you forgot Harrods...

[topvest] 06/1/2018 11:46

I think House of Fraser is doomed. I went into the Birmingham store after Xmas and it was really weird. It seemed to be in a time warp. The store is at least 10 years out of date, maybe 20. There is no way they will succeed. The Worcester (old Beatties) store is marginally better but the changing rooms are always closed. The staff say that's to stop theft. I've looked at their accounts and they have a little too much debt and probably now operating at break-even. Fairly shocking that their average lease obligation length is about 34 years....ouch! I think they will probably stagger on for another year or so, but really need a refinancing / CVA. Not a good buy by the Chinese owner; they will probably lose everything.

Beales was definitely a mistake by Perloff who bought a value trap. Not sure what the end game is, but no doubt there is some sort of fall-back property angle.

Debenhams needs to reinvent itself as it's really just a department store for the middle aged and pensioners which is hardly a growth proposition. Think you will probably see House of Fraser, Beales and Debenhams all gone within 2 years. Very sad, but they are all losers and not really winning in any area. Primark, H&M, Marks and Spencer, TK Maxx and Selfridges are what consumers want.

[tim 3] 06/1/2018 11:26

Simon

Which ones are you positive on?

[simon templar qc] 06/1/2018 10:47

Arthur,

I do try and balanced I have said all along if others suffered difficulty and went first the remaining stores would benefit.

I am negative on most stores at the moment but Debenhams has a lot of red flags.

As it happens I think House of Fraser is close to collapse and so is Beales, in fact Beales is a mess, its online offering very poor.

If I didn't think the economy wasn't in such a bad state my stance would be much different. I just don't see the CEO being able to turn the company round quickly enough.

I also see problems at John Lewis despite a good weeks before Christmas.

[qantas] 06/1/2018 10:19

Even the top end is not renewing his lease.

So think this is across the board and a passing cloud.



Things can only get better in 2018



Please do your own research....

[arthur_lame_stocks] 06/1/2018 10:06

I sold my DEB's yesterday for a number of reasons.

1. Given the new profit guidance the shares are no longer particularly cheap even at the current price.

2. The dividend has to be under threat now.

3. The balance sheet is not strong.

I still like DEB's wares and have issues with people describing them as tat and poor quality and the like when they either obviously don't shope there or are just trying to support their own short position.

Fortunately this was not a large investment for me and the losses run into the hundreds rather than the thousands and was more than offset by gains on Sopheon earlier in the week.

To be fair to Barrie he has called this correctly, I just wish he could be a bit more balanced.

Arthur

[qantas] 06/1/2018 08:50

Good morning Simon I think it is a passing cloud.



Please do your own research.

[tim 3] 06/1/2018 07:55

Specially for you Simon ;)

[simon templar qc] 06/1/2018 02:25

sum493

The company was seeing a rise in net debt to circa £275 million from memory, before the profit warning, so it looks like that would be rising to over £300 million.

A bid would be prohibitive with minimal net assets and billions of leases to contend with.

....

On the House of Fraser front the latest news from the BBC confirms they want to seek a substantial reduction in rent. Also reduce their store space by over a third. Its not quite certain what they mean by that, are they seeking to just get rid of stock on those floors or rent out the space?

All the big players have too much space in their stores, John Lewis was considering letting its excess space out for offices.

The big players have too much space and are getting frantic about looking for options to reduce space and generate income. The problem with that idea is most towns have empty shops in any event, albeit it may be economical to rent out some space rather than a particular business opening a venture in a sole independent shop. Franchises have in the past taken up space the only downside to a franchise is it can be competing against your own offering. The fact is there are too many fashion retailers out there and not enough customers and money.

All these ideas are OK in theory however they don't always work out. One needs an upturn in the economy and rising population to reverse the current situation.



The last option to reduce rents can be done through a CVA however there was a report done last year on most CVA's and the majority of companies that go down that route fail in the end. I did highlight last year the Debenhams store in Manchester been bought out by a new property owner and the rent was circa 5%, not that is not a huge percentage, some property rents can be in excess of 10%. All these things take time however and the large stores are running short of time.

The risks are increasing every day and I see it pointless investing in the worst companies when there are better options elsewhere. Even John Lewis profits will struggle to beat last year imo, the margins falling, I see a further cut in their profit bonus I don't think they will have an option.

This year will see a further rise in minimum wage in the Spring and business rates rise. Other costs are likely to rise as well.

Unfortunately there are bound to be some casualties, supermarkets are increasing their store offerings. ALDI and LIDL are also increasing their offerings and growing at a rapid pace.

The consumer environment extremely fierce at the moment the weakest will fail.

[creddy] 05/1/2018 23:38

director dealings can be a red herring. that volume of investment from a ceo is negligible and he's probably looking to offset capital loss in his DEB investment against capital gains elsewhere in his investment portfolio. BEWARE and DDYOR.

[sum493] 05/1/2018 22:12

how much debt has Debenhams?

Profit albeit reduced is still a profit

'Debenhams said pre-tax profit for the year ahead is now likely to be between £55 million and £65 million'

This for a company with a market valuation of 355 million - but how much debt do they have to service?

[simon templar qc] 05/1/2018 19:46

joepublic,

An "experience" event is the type of thing which could work, however with Debenhams being mid market it will be difficult to encourage customers to move from the comfort of their own homes and pay money to get into towns and cities and pay high parking charges and all the hassle when all these things can be viewed online.

Most the stores have done are or doing cheese and wine events, makeup events, but it isn't showing any dramatic increase in sales.

A complete transformation of a store is needed and time is running out. My local Debenhams is an old store and is gloomy and its not the only store like that. I was talking to some friends from London who live near Isleworth and they said the same thing, The stock dated.

After Christmas there were few people in my local store and Marks had multiples more people wandering around. My local debs is the wrong place in Town however, off the highest footfall area.

[joepublic1] 05/1/2018 19:09

Well yes and why wouldn’t they and also Debs get rent reductions. For the leasor better a lower rent than no rent at all because your tenant has gone bust.

If Debs recognize people want an experience I am surprised they don’t try in store fashion shows. Would have thought that would pull women in and they can sell them lattes and nail jobs while they watch.

Potential for things to swing around at some future point if Brexit uncertainty resolves and pound rises imports will get cheaper for the retailers and margins could rise.

[simon templar qc] 05/1/2018 18:40

Both SKY and Mirror say House of Fraser been seeking rent reductions before its trading statement.

They lost over £8 million on first half.

[1fox1] 05/1/2018 18:21

If anything I'd say his purchase would rule out an imminent buy out simply because it would be insider dealing. It's purely to try to prop up the share price.

[niggle] 05/1/2018 18:18

Interesting that the Chairman bought.

50k to stop some hassle may be? who knows?

b) Nature of the Market Purchase
transaction

Very odd. I doubt he knows anything we don't - if he does then it's insider dealing.

[american idiot] 05/1/2018 17:13

Not always QANTAS.

In DEBS case it is an attempt to re-assure investors. It won't work though.

Woolies directors also bought WLW shares in the run up to administration.

01/08/2008 13:54 UK Regulatory (RNS & others) Director/PDMR Shareholding LSE:WLW Woolworths
31/07/2008 17:39 UK Regulatory (RNS & others) Director/PDMR Shareholding LSE:WLW Woolworths
31/07/2008 16:10 UK Regulatory (RNS & others) Director/PDMR Shareholding LSE:WLW Woolworths
31/07/2008 16:09 UK Regulatory (RNS & others) Director/PDMR Shareholding

And then just a few months later WLW got this :-

19/01/2009 16:37 UK Regulatory (RNS & others) Application for Administration Order

Maybe hes bought for the non-existent future divis that have yet to be cancelled ?

[qantas] 05/1/2018 16:58

Debenhams

This is the most reliable sign shares will rise.

Buying of shares by a firm’s directors can be a great clue for investors. But you need to know how to interpret their dealings, says Telegraph share tipper Jim Slater

[american idiot] 05/1/2018 16:45

topazfrenzy5 Jan '18 - 16:23 - 3554 of 3558

The Chairman buying 175,000 is a very good sign, I am buying more too :)))

..........

Oh lordy, what a complete pair of idiots !

[simon templar qc] 05/1/2018 16:43

With at least one broker downgraded to about 25 pence, I feel the share price will go lower.

[1fox1] 05/1/2018 16:31

Thanks ST although if it hits 20-25p I'll be very tempted if just for a dead cat bounce

[1fox1] 05/1/2018 16:30

topaz have I just read your post correctly??

"I avoid people like him at all costs, the bores of the earth, just looking up negative stuff to prove a point over and over again"

Pot, kettle and all that. A little ironic coming from you. Take it back or I'll post it on the ZIOC thread. You hypocrite.