Department store giant Debenhams has failed to reach its potential for some time. 

Sergio Bucher

Sergio Bucher

Expectations are high for Sergio Bucher’s plans at Debenhams

It has not put in the disastrous performances that M&S specialises in every quarter but has not pulled ahead of the pack and has seemingly underwhelmed both shoppers and investors.

But the arrival of new chief executive, ex-Amazon European boss Sergio Bucher, is going to change all that, surely? 

Expectations are high – but how exactly he is going to do so is anyone’s guess.

Bucher has, rightly, been given six months to survey the business and put together his plan for the future.

At Debenhams full-year results presentation today, he did a meet and greet. But after speaking of his love of brands and his respect for Debenhams’ heritage, left the nitty gritty to chairman Sir Ian Cheshire, group trading director Suzanne Harlow and chief financial officer Matt Smith.

Debenhams’ figures won’t be setting any worlds on fire.

Underlying profit before tax crept up 0.5% but hid some pretty hefty exceptionals – the Irish examinership for one – while like-for-likes inched up 0.7%.

A solid platform

But underneath those rather dull figures, Debenhams is not in bad shape.

It’s has diversified its business and reduced its reliance on clothing, bringing it down from 50% last year to 48% this year.

That may only be a couple of percentage points but actually equates to the better part of £100m.

It’s a sensible strategy at a time when fashion is going through the mill and consumers seem to be forsaking shiny new purchases for experiential spending.

“Debenhams is further diversifying its business by launching two new categories in home”

It has worked hard to build a market-leading premium beauty offer, which has grown 10% over the last two years.

Its UK-exclusive launch of fast-growing cult US make-up brand Kat von D, from which it sold a product every six minutes on launch day, was deemed its best ever by top brass today.

Debenhams is further diversifying its business by launching two new categories in home – lighting (produced by BHS’s lighting team which Debenhams hired en masse), which it will debut in 30 stores, and ‘furniture hubs’, which will be introduced in eight stores.

Its ongoing programme to give space to more lucrative in-store dining options also appears to be paying off. 

Debenhams’s third-party dining, provided by Franco Manca, Costa Coffee and Patisserie Valerie, has grown 13% this year.

“We have talked for the last 12 months about wanting to grow our food business,” Harlow said.

“We want to give people a reason to visit stores because we know that when people visit stores [rather than shop online] they spend more often.”

Smart financial manoeuvring will also help Debenhams over what will be a challenging 18 months across retail.

The department store is hedged for the next 12-18 months, longer than many in the market, which will give it greater flexibility when it comes to deciding to raise prices.

Clever use of space, diversified categories and smart hedging have given Bucher a solid platform and the business will be ready for whatever grand plan the new boss has in mind.