Debenhams to close German chain

Debenhams is expected to axe its fledgling German chain after its fashions failed to strike a chord with the locals. Last week it emerged that the department store group was looking for a European partner and had made contact with peers including Germany's Karstadt Quelle and Galeries Lafayette in France. However, Debenhams entered the German market in its own right earlier this year, opening trial franchise stores in a handful of locations including Berlin.

Their ranges have been poorly received, sources say, and the stores are likely to shut at the end of August.

www.debenhams.co.uk
9 July 2007

Another profit warning from Debenhams

Department store group Debehams has issued yet another profit warning as it posted interim results on Tuesday morning. Like-for-like sales dipped 6.9 percent in the first weeks of the second have, with a fall of 4.5 percent in like-for-like sales for the half year ended 3 March. Meanwhile, pre-tax profits rose 34.4 percent to 105.5 million on sales up 5.8 percent to €1.29 billion, in line with expectations.

Rob Templeman, Debenhams chief executive, said: “Although the comparative period last year was particularly strong, sales achieved during these weeks are below our expectations. Clearly it is very early in the period but given this trend we must plan on the basis that like-for-like performance may be negative in the second half.” Templeman blamed the decrease on “an underperformance in our menswear division and disappointing sales from our outerwear and knitwear ranges.” Chairman John Lovering attributed the difficulties to three interest rate rises, higher utility and council tax bill and subdued wage increases.

The company, which opened its first store in Russia during the first half of the year, intends to take action to rectify the situation, although Templeman conceded that profits will nevertheless fall below market expectations. He pointed out that the company had focused its capital expenditure on new store openings and acquistions, including Allders and Roches. Looking forward he said: “We are now planning to refit around 60 of our stores in the next 18 months.” He said the refits may cause some “disruption” but insisted the investment would ensure that Debenhams stays “at the forefront of the UK retail market.” “Throughout the business we are investing in better in-store service levels and more contemporary presentation,” Templeman concluded. “I am confident that our investment in product, value, service and our stores will drive like-for-like sales later in the calender year.”

www.debenhams.com
17 April 2007

Debenhams sales drop

British department store chain Debenhams posted another sales slide and continued to cite a tough retail environment. Overall sales for the 26 weeks ended 4 March were up, thanks mainly to new store openings including some of its smaller Desire outlets. However, like-for-like sales dropped 4.5 percent. On a more positive note, chief executive Rob Templeman was cautiously optimistic about the new spring and summer collections. “Although it is far too early to draw conclusions on the performace of our spring/summer ranges, we have been encouraged by the consumer reaction to our new collections. It's only two weeks into the new season, but so far we've seen better momentum and better consumer reaction.” He did add, however, that he expected the retail environment to remain “challenging”. The company would therefore focus on managing stocks, costs and cash margins.

www.debenhams.co.uk
21 March 2007

Debenhams criticised by bank research

The recently refloated department store group Debenhams has been criticised in a major research note by Goldman Sachs, the bank. The 126-store retailer was ranked bottom in a league table of nine European clothing chains by the bank, which also cut Debenhams' price target and earnings forecasts.

The retailer's poor showing will heighten concerns that it was returned to the public arena in poor shape by its private equity owners, Texas Pacific Group, CVC and Merrill Lynch Global. "Our concern comes from underinvested stores, uncompetitive prices, cost cuts affecting service standards and a high level of promotional activity damaging the brand," Goldman said. It was not all bad news. In a survey of 650 shoppers, Debenhams was seen as selling the second-best quality clothes, after Marks & Spencer. Overall, customers ranked Debenhams 7th out of 15 UK retailers.

www.debenhams.co.uk
19 February 2007

Debenhams backers still struggling with debt

The high street banks that backed the controversial return of Debenhams to the public markets last year have struggled to refinance most of the retailer's £1bn-plus debt. The Sunday Telegraph yesterday on Sunday published that the four banks that arranged the refinancing — HBOS, Royal Bank of Scotland, Lloyds TSB and Barclays — are still sitting on the bulk of the debt some eight months later, despite considerable efforts to sell the debt to other banks and institutional investors.

Debenhams has come to epitomise the so-called "quick flip", where private equity houses buy a business cheaply, load it up with debt and then sell or float it at a huge profit a couple of years later. In this type of transaction the high street banks would normally have syndicated most of the debt within a couple of months of the deal. But some of the banks were still having individual conversations with potential investors in the past few weeks. "They have been having a few quiet discussions with a couple of hedge funds about selling it," said a fixed-income trader.

www.debenhams.co.uk
22 January 2007

Debenhams reports growth

Department store group Debenhams total cumulative sales for the 19 weeks to 13 January are up by 6.3 per cent compared with the same period last year, while like-for-like sales in the UK retail business are down 4.0 per cent.

Debenhams stated that the group's sales mix in the first half had been affected by slower than expected clothing sales and as a consequence of the impact of the integration of the Roche stores and their reliance on lower gross margin concession sales. “Debenhams' sales performance has improved since we reported figures for the period to 10 December 2006 but the market remains challenging and we are cautious about the out-turn for the rest of this financial year,” said chief executive Rob Templeman.

www.debenhams.co.uk
16 January 2007

Debenhams voted favourable brand

Department store group Debenhams has recently been voted 8th most favourably viewed brand by Marketing Magazine 2006, however their popularity didn't increase like for like sales, which dropped by 4.2 per cent since September. Group turnover increased by 6.6 per cent to £2.19 billion. Debenhams has been trialing a compact version called Desire by Debenhams which is mainly aimed at the female market with designerwear and cosmetics which will have boosted profits. The group is no longer solely a retailer, other ventures include Debenhams Finance, Debenhams Mobile and a travel money scheme.

Underlying sales performance has been poorer than expected during the recent return to the stock market by Rob Templemen. The existing final salary pension scheme is also to be axed following 'financial strain' on the company. Debenhams is accelerating plans to expand their portfolio of department stores, either by acquisition or new store openings, and believe there is potential to increase their portfolio from 132 up to 240 stores in the UK and Republic of Ireland. Total sales for the company increased by 7 per cent and margins are expected to improve until the end of the financial year.

www.debenhams.co.uk
24 October 2006

Debenhams FY results disappoint

British department store Debenhams revealed muted sales and profit expectations for the full year. Although sales for the 52 weeks ended 2 September rose 6.6 percent, like-for-like sales only rose 0.5 percent. “We were up against quite strong comparisons of about 3 percent like-for-like this time last year,” said chief executive Rob Templeman. “What we saw was that August and July were pretty strong after the really hot weather and after the World Cup. And now we are anticipating people coming into the stores to buy coats as the cooler weather comes.”

Debenhams emphasized that gross margins had improved. “This, together with encouraging sales growth and continued cost focus, means that Debenhams expects to report that profit before taxation and exceptional items is in line with the board's expectations at the time of the IPO.” The company was floated on the London Stock Exchange in May, with shares priced at 195p, valuing it at £1.68 billion. Since Debenhams went public it has opened two department stores in Doncaster and Workington. With another six contracts signed, 25 new department stores are scheduled to open within the next three to five years. In August, the company agreed to buy nine stores in the Ireland from Roches Stores. The agreement has been approved by the competition authorities and the stores will be converted during the course of this year. The company is also planning to open more Desire by Debenhams stores, a smaller format featuring designer products. Currently there are five Desire by Debenhams stores in operation and contracts have signed for another three. “There are probably about 100 towns we could put this format in over the next ten years,” said Templeman, concluding: “Although, as widely reported, the market was challenging in the early part of the summer, there are signs that trading conditions are improving. We continue to successfully manage our stocks and remain confident that the rigorous delivery of our strategy, together with our store expansion programme, will continue to drive the growth potential of Debenhams.”

Preliminary results for the full year will be reported on 24 October.

www.debenhams.com
20 September 2006

Debenhams plans new department stores

Department store Debenhams is continuing its drive for expansion and is planning to open eight Desire stores by the end of this year.
The Group is looking to more than double its number of smaller format Desire stores with a planned five further openings. The first of which will open in Birmingham Fort in September, and three others in Scotland, Wales and northern England will open by the end of the year in a mix of high street, shopping centre and retail p ark locations, according to Drapers.

These follow a 14,000 sq ft store opening in Howgate shopping centre in Falkirk planned for August.
Debenhams acquisitions manager Robert Hadfield stated: “The format has been successful and we are confident it can work in different types of locations. We want to open more than one hundred but it depends when and where the opportunities arise. There’s a huge acquisition programme across the Desire stores and the full-size stores.”

Debenhams returned to the stock market last week at 195p per share and its store opening strategy was a key plank of its flotation story.
Full-line department stores will open in Frenchgate in Doncaster and Workington in Cumbria this summer as well as its first full-size department store in a retail park in Llandudno, north Wales, in October. Around 25 more store openings are thought to be planned over the next five years.
The first Desire store debuted in Truro, Cornwall, last June. Others are in South Shields in south Tyneside and Orpington in Kent.

17 May 2006

Debenhams flotation raises £950m

Debenhams has raised £950 million in its initial public offering, making it one of the UK’s largest listings in almost five years. It sold 487.2 million shares for 195 pence per share. In early trading shares rose up to 5 percent.
This IPO signifies the retailer’s return to the market, after having operated as private company for almost three years. Debenhams will begin trading as a public company from next Tuesday. With prices between 195 pence and 210 pence, the company has been valued at £1.95 billion, and with debt of £1.2 billion, its enterprise value will be between £2.9 billion and £3 billion. It will not, however, make it onto the FTSE 100, as the smallest company on it is Cable and Wireless with a market capitalisation of £2.4 billion.
Private equity investors Texas Pacific, CVC Capital and Merrill Lynch Global Private Equity, will retain a stake of about £620 million after the float. Chairman John Lovering stands to make £5.2 million if shares sell at 210 pence, and will retain another £12.6 million.

www.debenhams.co.uk
5 May 2006

Debenhams directors to make fortune

The four executive directors and the chairman of Debenhams will have made over £165m between them in the three years since the chain was taken private when the company returns to the stock market this week. On top of the £107m in cash and shares that Rob Templeman, Chris Woodhouse, Michael Sharp and John Lovering stand to make when the company starts trading on Thursday, the directors also benefited from £58m of loan notes, which the company has since paid back. Details are contained in Debenhams' pathfinder prospectus, which was released last week. Thursday's flotation, which will value the company at around £3bn when debt is included, is one of the largest this year. The indicative price range is 195p-250p and analysts expect the stock to be priced at 210p-220p, just below midway in the range forecast. On that basis, it will trade on a multiple of about 14 times profits. David Cumming, head of UK equities at Standard Life Investments, said "Fund managers are not keen to sell out to private equity then see that company come back three years later. Debenhams is a classic example. Fund managers sold out at the wrong price," he said.

1 May 2006

Debenhams public offer continues

The initial public offering of Debenhams, which has been earmarked for May 4, has been priced between 195p and 250p, valuing the company at £1.8bn at the mid-point of the range. However, Rob Templeman, the chief executive of the group, and his board face an uphill battle convincing previous investors - which include major institutions such as Standard Life and Morgan Stanley to buy back in at roughly the price that they sold out for.

Representatives from a number of institutions that were holders of Debenhams stock three years ago said they were sceptical about its growth prospects. "It is not a strong franchise and it is coming back at a reasonably full valuation," says David Lis, a fund manager at Morley, which owned just under 2 per cent in Debenhams before it was taken private "They have clearly done a great job but the easy wins have been done. The newer, smaller shops have only been tested in a small way so far."

An adviser close to Debenhams says future growth will be driven by three things: a more cost--effective store roll-out programme; its new store concept; and the prospect of extracting more from the existing operations by tightening up the supply chain, reducing the time between ordering goods and taking delivery of them from 16-18 weeks to between eight and 10 weeks. "The company has a better product mix today that is competitive in each category," says the adviser. "Debenhams is also spending money more effectively, thereby increasing the return it can derive from the stores."

Nevertheless, Templeman and his team have a tough task ahead of them over the next fortnight. The IPO will net the store's top three executives a paper fortune of about £100m and, as analysts at Collins Stewart, the broker, point out, they are past masters at getting their timing right, buying low and selling high. They did exactly that at Homebase, buying the retailer from J Sainsbury with backing from Permira and transforming its profitability.

Debenhams flotation one of UK biggest

Debenhams will launch a formal roadshow to potential investors in the £3 billion flotation of the department store group. Chief Executive Rob Templeman will front the sales pitch. The flotation is expected to be one of the biggest in the UK this year and will produce massive products fro investors and top management. Debenhams venture capital owners CVC Texas Pacific and Merrill Lynch will make a £1.8bn return in less than three years.

Debenhams directors set for profits

Three top Debenhams directors including chief executive Rob Templeman will make a paper profit of more than £100m if the retailer pushes ahead with its floatation. Debenhams owners will make a £1.8bn return less than two and a half years after they bought the business. Rival private equity firms have been approached in the past few weeks to test their interest in assembling a buyout of the company. Debenhams private equity owners plan to sell a 60 per cent stake according to a research note circulated to fund managers by Citigroup, one of the two banks leading the float.

Debenhams prepares for pending flotation

Debenhams is in preparatory mode for its flotation on the London Stock Exchange later this year. The department store has been valued at approximately £3 billion, including debt.

Final pricing of the company is to be set at the beginning of May, when it launches on the LSE. The flotation will mean an exit for its owners, buy-out groups Texas Pacific Group and CVC Capital, and the private equity arm of Merrill Lynch. The trio bought the store three years ago.

Debenhams realized sales of £2.09 billion last year, up 9.7 percent from the previous year. The store will float on the back of its half-year results ended February, in what promises to be the UK's biggest IPO this year.

The department store has retained Citigroup and Merrill Lynch as global coordinators for the IPO and has mandated Morgan Stanley and CSFB as bookrunners.

Part of the proceeds from the flotation is expected to be used to pay its debt, which stood at £1.9 billion at the end of August last year.

Debenham's management, led by chief executive Rob Templeman, owns up to 12 percent of the equity. TPG owns 36 percent, CVC just under 26 percent and Merrill Lynch owns 20 percent. The trio is expected to retail a small share after the float.

www.debenhams.co.uk
6 April 2006

Debenhams flotation to go ahead

Debenhams has appointed Citigroup and Merrill Lynch as joint global coordinators for its flotation which is tentatively scheduled for April and could value the UK department store group at £3bn. Debenhams is expected to float on the back of first half figures to the end of February however Debenhams said that the business had continued to trade strongly however it declined to comment on the IPO

29 January 2006

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