Debenhams : advertising & marketing assignments

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Debenhams is the UK's second largest department store operator (after John Lewis), specialising in affordable designer fashion as well as home furnishings, beauty products and household goods. The group has experienced something of a rollercoaster ride in recent years. During the 1990s, a new management team installed by what was then Burton Group successfully reinvented what had been one of the country's most staid and old fashioned retail chains. Spun off as an independent company, Debenhams' success continued during the early 2000s under new chief executive Belinda Earl, before it fell prey to private equity buyers in 2003, who loaded it with debt under which it has been struggling ever since. Performance has been less sure-footed since then, especially after the group went public again in 2006. Despite the challenging retail environment, Debenhams seemed to have turned the corner in the late 2000s, stealing market share even from traditional rivals such as Marks & Spencer with its "Designers at Debenhams" initiative, in which it signed up a star-cast of celebrated mid-range fashion designers to produce exclusive private-label collections. But a new set of problems emerged towards the end of 2013, and performance has steadily but surely declined since then. Net revenues have been flat for several years at around £2.3bn, but profits have been falling as a result of competition from online sellers as well as steep increases in rent and rates. A sharp downturn across the UK department store sector during 2018 forced Debenhams to issue a series of profit warnings. For the year to 2018 it reported a whopping £492m loss on revenues of £2.3bn, and announced the closure of up to a third of its UK stores by 2023. It is also expected to seek buyers for Danish retail chain Magasin du Nord. Former Amazon Fashion Europe chief Sergio Bucher became CEO in 2016, but left in Spring 2019 after the group collapsed into adminstration. His successor is retail turnaround specialist Stefaan Vansteenkiste. The company continues to trade pending a restructure. Debenhams traces its history back to 1778 when William Clark established a drapers store in London to sell expensive fabrics, bonnets, gloves and parasols. In 1813, William Debenham acquired a controlling interest in the firm, which then took the name Clark & Debenham. The Debenham family continued to own the business until it went public in 1928.

Capsule checked 25th April 2019

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Recent stories from Adbrands Update:

Adbrands Daily Update 9th Apr 2019: Debenhams called in administrators after a deal was agreed for the operating business to be bought out by its creditors for around £622m, including £520m of debt and pension obligations. The arrangement wipes out all the troubled department stores' shareholders, including Mike Ashley who had been angling to take control of the business. His investment of £150m is liquidated. "It is disappointing to reach a conclusion that will result in no value for our equity holders," said chairman Terry Duddy. "However, this transaction will allow Debenhams to continue trading as normal, access the funding we need and proceed with executing our turnaround plans, while deleveraging the group’s balance sheet. We remain focused on protecting as many stores and jobs as possible, consistent with establishing a sustainable store portfolio in line with our previous guidance." Around 50 stores are likely to close, assuming an agreement can be made with landlords.

Adbrands Daily Update 11th Mar 2019: A further slump in performance precipitated a new crisis at Debenhams. Weak sales over the holiday season and a dramatic slowdown in online revenues forced the group to seek additional short-term finance and it has warned that earlier profit forecasts for the current year are "no longer valid". That has prompted retail entrepreneur Mike Ashley, whose SportsDirect group is now Debenhams' biggest shareholder at almost 30% of equity, to launch what is effectively a takeover bid for the business. Ashley has called for the removal of virtually the entire board of directors and his own appointment as chief executive.

Adbrands Weekly Update 1st Nov 2018: Struggling UK department store chain Debenhams reported the worst results in its long history and said it will close almost a third of its UK outlets over the next three to five years. A dramatic consumer shift away from traditional physical retail accompanied by rising rent and rates has caused havoc in the UK's department store sector. Market leader John Lewis warned of a wipe-out in profits, while third-placed House of Fraser went into administration earlier this year. Debenhams said sale-store sales had slipped by over 2% over the year to September, but non-cash write-offs against stores, goodwill and IT systems resulted in a pre-tax loss of £492m. Excluding one-off costs, underlying pretax profits were down by two-thirds to £33m on net revenues down 3% to £2.3bn.

Adbrands Social Media 10th Nov 2017: "You Shall Find Your Fairytale Christmas". J Walter Thompson has summoned up all its creative juices for a last burst of imagination for fashion department store Debenhams. Sadly, it's all too late; had the agency pulled off a similar feat last year, they wouldn't be losing the account in the New Year. Even with its Cinderella story steal, we found ourselves unexpectedly charmed by the film, definitely Debenhams' best for many years. Some nice touches throughout, good-looking leads, and capped by a pleasing cameo from Ewan McGregor. 

Adbrands Weekly Update 9th Jan 2014: A number of UK retailers suffered a poor or worse Christmas, with competition heightened and profitability severely dented by heavy discounting. In a sign of growing desperation, several stores began their seasonal sales even before Christmas Day, prompting what has been described as a "sea of red" on the High Street. British department store Debenhams was first out of the gates with bad news, announcing its second profit warning in a year. Like-for-like (LFL) sales were marginally higher than the year ago period, but profits were down, as gains from online shopping failed to offset an in-store slump. Trading rival John Lewis had completely the opposite experience, with combined sales up over 7% in the five weeks up to the end of December. As with Debenhams, the strongest gains were online, with ecommerce jumping almost 23% year on year, compared to a gain of just 1% in-store. There was a similar story at another department store operator, House Of Fraser, which claimed the best Christmas in its history as a result of a near 58% leap in online business, and total LFL up over 7%.

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