The exclusive deal is a coup for Debenhams, which has played second fiddle to department stores such as House of Fraser and Selfridges for some time.
The deal shows that Debenhams is carving itself a niche against very strong competition. Kaupthing retail analyst Matthew McEachran makes the interesting point that Debenhams management are really starting to succeed in attracting interesting brands. He points to Ted Baker Kids as an example – signing an exclusive deal like this is not something such a protective brand would do lightly.
Key to Cortefiel's success in the UK will be its prices, but also having Debenhams as its partner. Cortefiel’s Springfield label is a value fashion offer and it will have to compete with a higher cost base here than in Spain. However, its success abroad – expanding to 48 countries – means that it is well-versed when it comes to entering new markets.
And with Debenhams as its partner, the Spanish fashion giant is entering this country in a low-risk way. With concessions in just two stores to start off with – London’s Oxford Street and Guildford – Cortefiel can test consumer appetite and grow from there. And it surely won’t be long before it expands to further stores.
Meanwhile, House of Fraser gave the high street some welcome news this week when it reported 2.9 per cent sales growth in its first half. The retailer is now more than halfway through its three-year turnaround plan and, in this market, must be pleased with its results. The drive to position itself above the middle market and try to be the UK and Ireland’s “premium” department store chain has so far shielded it from the consumer downturn.
House of Fraser’s plan to strengthen its high-end status should help it continue this pattern. New tie-ins such as Anya Hindmarch, The White Company and Ralph Lauren are definitely a cut above the middle market.
The department store gave no like-for-like figures, which are widely thought to be down, but with EBITDA ahead 30 per cent in the past 12 months, renewed chatter has flooded the market that House of Fraser owner Baugur will look again at consolidating UK department stores by buying Debenhams.
While the weather in August so far has dampened the British mood, it has not dampened the mood at House of Fraser HQ. Weather aside, the ability to win new brands and continue creating a niche for itself will be essential to its turnaround as well as weathering the UK downturn.