Financial Trading Blog

Stock of the day 17/06/2016 – Debenhams PLC



With the British high street seemingly stuck in a perpetual decline how will bricks and mortar mainstay Debenhams deal with its latest trading statement next Wednesday?


After an unpleasant end to 2015, a year that had seen the stock sale £1-pushing heights before diving in the final quarter, Debenhams’ decline showed no sign of slowing down as 2016 got underway. In among all the gloom that greeted the New Year the stock plunged to 63.7p from 73p in less than a fortnight, leaving Debenhams at lows not seen in 14 months.

Yet this slump was quickly overcome in style as the company released its post-Christmas update on January 12th. Jumping over 15% the retailer revealed it had successfully navigated the warmer winter weather woes that had plagued rivals Next and Marks & Spencer, instead producing a far better than expected 1.9% rise in like-for-like sales for the 19 weeks to January 9th. For the rest of the month Debenhams managed to climb towards 80p, only for the start of February market-wide malaise to push the stock back below 75p.

Debenhams PLC Chart June 2016 Spreadex Financial Spread Betting
(Source: IT-Finance.com 17/06/2016)

Bouncing between 75-80p for the rest of February and most of March the stock then hit 2016 highs of 82p in the middle of April as it posted its half year figures. Not only did the company see a 5.5% rise in pre-tax profit to £93.8 million off the back of a 1.6% sales surge to £1.63 billion, but it finally confirmed that it would be naming its new CEO in the weeks following the 6 month update.

Sadly that CEO announcement at the end of May, with former Amazon fashion head Sergio Bucher replacing Michael Sharp, failed to stall Debenhams’ post-2016 peak decline, the stock falling all the way to a 5 month low of 68.2p as Brexit-fears began to take hold of the market. Debenhams sits at a current trading price of 71.2p (IT-Finance.com, 17/06/2016).

If Debenhams wants to lift away from these current lows it needs to continue the run of good form it has been on of late update-wise. The company’s consistent sales growth in the last 6 or so months seems to be something of an anomaly on the UK high street, a fact that may catch up to Debenhams sooner rather than later.

Debenhams PLC has a consensus rating of ‘Hold’ with an average target price of 79.33p.

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