Sharp result for Debenhams’ departing CEO
Debenhams CEO Michael Sharp has released the last results of the UK-headquartered department store chain under his watch – and they’re pretty sharp.
The retailer is still holding off appointing Sharp’s replacement, despite having known of this impending departure for some time. However, this was a reasonable signing off, with online performance in particular showing strong performance, underlined by online EBITDA up 12 per cent in the half to complement the 10 per cent online revenue growth.
In the UK, there has been a significant focus on stores and how to utilise space more effectively. With five new stores opened and one closed during the period, the retailer now has 165 stores in the UK, trading from 11.5 million sqft of space.
In addition, Debenhams has undertaken a “space optimisation program”, which has essentially resulted in giving over more space to concessions, including 15 third-party branded food service offers. This kind of undertaking is essential for Debenhams, and department stores in general, to stay relevant to shoppers, as their online operations risk undermining the attraction and performance of store estates.
While CEO, Sharp has laid the foundations for a resilient business, albeit the UK is not where Debenhams is likely to find significant future growth. However, internationally there is a major opportunity, which the fall in international gross transaction value of 3.7 per cent somewhat disguises, as on a constant currency basis this would be up 3.2 per cent.
Debenhams should take all the lessons it is learning from its multi-channel UK business and apply it to foreign markets, with less established online operations from department stores, and look to build a competitive advantage in this area.
- Matthew Rubin is a senior analyst at Verdict Retail.