Debenhams
All,
Debenhams have released an update this morning - see below.
In short, the restructuring will be deeper after all. While progress had been made on the bridge, it is no longer seen as sufficient to stabilise the business. So even though the company stirred some “hope” in January that the bonds might get away without a haircut, that option - as originally expected last year - is no longer on the table.
The company continues to lose LfL sales - if at a slower pace - domestically and internationally. Digital growth is slow too.
The cost savings program is on track and the sourcing via Li&Fung is about to go live.
We have not done significant work on the name, because we are lacking a vision for Debenhams overall, as well as a plan we can believe in. Nonetheless, do call if you have any questions.
Wolfgang
Debenhams: Trading Update
This announcement contains inside information
5 March 2019
DEBENHAMS PLC
Trading Update
Debenhams today announces an update on trading for the 26 weeks to 2 March 2019.
As set out in the trading statement of 10 January 2019, the first 18 weeks of our financial year saw Group gross transaction value ("GTV") decline (5.6)%, with LFL down (5.7)%. The UK was down (6.2)% with International down (3.5)%. Digital sales grew by 4.6% across the period.
In the subsequent eight weeks, Group GTV has moderated its decline to (5.0)%, with LFL of (4.6)%. Overall, for the 26 weeks of H1, to 2 March 2019[1], Group GTV has declined (5.4)%, with LFL of (5.3)%. The UK was (6.0)% with International down (2.3)%. Digital sales have grown by 2.0% across the period. The annualised £80m cost saving programme is on track, and we expect the first ranges resulting from our sourcing partnership with Li & Fung will be in stores in the current season.
Further to our announcement of 12 February regarding the additional £40m bridge facility, discussions with stakeholders have now progressed to include options to restructure our balance sheet in order to address our future funding requirements, and are continuing constructively.
While trading headwinds have moderated in recent weeks, this process is likely to be disruptive to our business in the coming months. Taken together with macroeconomic uncertainties and increased financing costs as a result of additional working capital needs, this means that the Group's statement made on 10 January that we were "on track to deliver current year profits in line with market expectations" is no longer valid. We will provide a further update with our interim results announcement.
Sergio Bucher, Chief Executive of Debenhams, said:
"We are making good progress with our stakeholder discussions to put the business on a firm footing for the future. We still expect that this process will lead to around 50 stores closing in the medium term.
"Our priority is to secure the best outcome for the business and all our stakeholders, whilst minimising the number of store closures and job losses. To do this, as we have said before, we will need the support of both landlords and local authorities to address our rents, rates and lease commitments. I would like to thank our staff - and all our stakeholders - for their continued support through this period, as we work to deliver a sustainable future for the company."
ENDS
Enquiries:
Analysts and investors
Debenhams PLC Rachel Osborne, CFO
Katharine Wynne, Director of Investor Relations
Media
Brunswick Group Tim Danaher/Craig Breheny/Fiona Micallef-Eynaud