Debenhams results underwhelm
The last set of Debenhams results under outgoing CEO Michael Sharp provide little to shout about.
Sharp plans to step down at the end of this week from the helm of the UK department store retailer, with Sergio Bucher, VP of Amazon’s European fashion business, taking over from October.
The latest results show marginal like-for-like growth in group turnover of 0.7 per cent during the 41 weeks June 11, but were underlined by a stronger performance online with sales growing 9.1 per cent. However, group like-for-likes declined 0.2 per cent in the third quarter, with unseasonal weather hitting the appeal of summer collections.
In the UK, space optimisation remains a strategic focus with plans in place to fill 75 per cent of the originally identified 1million sqft of space by Christmas, rolling out further Jack & Jones concessions and introducing Claire’s Accessories, as well as new food outlets including Italian chain Franco Manca. While this kind of undertaking is essential for Debenhams to stay relevant and drive footfall, the retailer must also review the performance and desirability of its ‘Designers at Debenhams’ collections to ensure a strong own label offer differentiates its proposition and appeals to its loyal 40+ customer base.
Uncertain trading conditions during the 41 week period have most noticeably impacted clothing. Health and beauty sales achieved good growth, demonstrating the department store’s strategy to increase the mix of non-clothing sales is proving to be a smart move in supporting its performance against a backdrop of unpredictability.
While the new CEO will need to continue to execute the department store’s core strategic focuses to mitigate trading ambiguity, Bucher must first tackle the underperformance in clothing to prevent further market share erosion.
- Rebecca Marks is an analyst with Verdict Retail.