• Home
  • Executive
  • Management
  • Debenhams H1 pretax-profit up, CEO Michael Sharp confirms exit

Debenhams H1 pretax-profit up, CEO Michael Sharp confirms exit

By Prachi Singh

loading...

Scroll down to read more

Management |REPORT

Debenhams Group operating profit was 0.2 percent above last year for the 26 weeks to February 27, 2016. Reported profit before tax increased by 5.5 percent and profit after tax increased by 6.4 percent. Meanwhile, the company’s CEO Michael Sharp has confirmed his departure from Debenhams.

Commenting on the development, Sir Ian Cheshire, Non-Executive Chairman of Debenhams, said, “As this will be his last set of results, on behalf of the Board, I would like to thank Michael for his service as Chief Executive of Debenhams. He has led the business through an unprecedented period of change for the sector, leaving the business in good shape for the future as these results demonstrate. I am pleased that this means we can today announce an increase in the interim dividend, consistent with our progressive dividend policy. The foundations to deliver sustainable growth are in place and we are in the final stages of appointing a new CEO to lead the business.”

Financial summary of the first half

Gross transaction for the 26 weeks to February 27, 2016 for the UK segment increased by 2.9 percent to 1,336.5 million pounds (1,888.5 million dollars) and reported revenue grew by 1 percent to 1,109.7 million pounds (1,567.8 million dollars). This the company said was a result of continued online sales growth and the benefit of five new store openings in the first half of 2016 which overall led to a strong Christmas trading period.

The like-for-like performance of stores was broadly flat in the half. EBITDA increased by 3 percent to 125.5 million pound (177.3 million dollars) reflecting the benefits of lower markdown, continued sales growth and good cost discipline. Operating profit for the year increased by 2.1 percent to 76.1 million pounds (107.5 million dollars).

International segment revenues decline

In the international segment gross transaction value was 3.7 percent lower than last year and reported revenue decreased by 4.2 percent. Both metrics, the company said, have been impacted by weaker Euro and Danish Kroner exchange rates, suppressing Group LFL by 1.3 percent. On a constant currency basis, international gross transaction value improved by 3.2 percent.

The constant currency growth was driven by Magasin du Nord's continued strong performance, and some improvement in the Republic of Ireland sales. A number of franchise partners have sought to improve their working capital positions by reducing stock intake in the Autumn/Winter 2015 and Spring/Summer 2016 seasons. A number of markets, such as the Middle East and Russia, are also planning more prudently as a result of more difficult trading conditions.

International operating profit decreased by 5.6 percent. Group operating costs before depreciation increased in line with expectations, growing 2.6 percent despite the further shift into online. Group operating profit was 0.2 percent above last year. Reported profit before tax increased by 5.5 percent and profit after tax increased by 6.4 percent. Increased profits resulted in a 5.1 percent increase in both basic and diluted earnings per share to 6.2 pence.

CEO Michael Sharp formally resigns

As announced in October 2015, Michael Sharp will step down as Chief Executive of Debenhams this year and has today submitted his resignation to the Board. The process to appoint his successor is well advanced and details will be communicated in due course. As previously agreed, he will continue as Chief Executive until his successor is confirmed to ensure an orderly and smooth handover.

Commenting on his departure, Michael Sharp said, "It has been a privilege to lead Debenhams and I am very proud of our achievements since September 2011. I believe Debenhams is now capable of competing in the ever changing and challenging world of multi-channel retailing. We have a strong and talented management team and I would like to thank them and our 30,000 colleagues for their continuing support, hard work and passion."

Debenhams