Analysts have reacted positively following a trip to see Debenhams’ Danish department store chain, Magasin du Nord, last week.
Shore Capital analyst Kate Calvert said the £12.3m, six-store acquisition unveiled last November “improves Debenhams’ profit growth visibility, which we believe the market is overlooking”.
She said: “We believe Magasin will turn out to be just as good an acquisition as both Allders in 2005 and Roches in 2006. Magasin improves Debenhams’ profit growth momentum in the short term and fills the gap until the property market improves and we get more positive news on its UK new store pipeline.”
But she warned Debenhams to be careful not to broaden the Danish store’s offer too much, putting its upmarket positioning at risk.
Investec analyst Katharine Wynne said the trip “confirmed our view that Debenhams has made a good quality, earnings-enhancing acquisition.”
“In an environment where the UK outlook remains uncertain, Debenhams continues to offer relative earnings protection, thanks to self-help,” she added.