Department store group Debenhams took analysts on a tour of its Milton Keynes shop last week.
Department store group Debenhams took analysts on a tour of its Milton Keynes shop last week. The visit sparked a flurry of upbeat notes as brokers came away impressed by retail disciplines and UK strategy.
While Debenhams is embracing multichannel retail, what seemed to please the City contingent was Debs’ high in-store standards and focus on getting shopkeeping basics right. It was an “old-school” approach, in the words of broker Espirito Santo, epitomised in a comment from Debs’ newish retail director, former Arcadia man Mike Goring, who said the retailer’s aim is “to make shedloads of money”.
What is old school about Debenhams, in the best sense of the phrase, is the constant focus on excellence of execution throughout the business, from visual merchandising standards to the development of own-labels.
Debenhams has had ups and downs since its IPO in 2006 but it has grown and looks likely to continue. It still sees scope to build an estate of 240 stores from 165 at present, representing an additional sales opportunity of £1bn. As Seymour Pierce noted wryly, that may be “unlikely in our lifetime” but Debs has ridden the downturn well and that should continue. Debs issues a full-year trading update on Tuesday, when the trading temperature can be taken.
Burberry sales blip
Luxury specialist Burberry’s shares were about as fashionable as a shell suit on Tuesday as the retailer revealed slowing sales growth and said profits will be at the low end of expectations.
The question is whether the trading upset is a one-off or a sign of a longer-term trend. Burberry has performed strongly under the leadership of Angela Ahrendts and there seems little reason yet to think she has lost her touch.
Because Burberry has been such a City darling, however, disappointment is especially keenly felt and the pressure will be on for a return to form.