1313 Friday 11 January 2019

It’s certainly been an eventful week in the soap opera that is Debenhams. Much of the time was spent speculating how bad their Christmas sales figures would be as many retailers posted their figures throughout the week and when Debenhams announced yesterday, no one was really that surprised. But what followed certainly caught the eye.

The firm announced a 5.7% fall in like for like sales in the eighteen weeks leading up to 5th January which was broadly in line with expectations. Talk then shifted to the company’s debt pile to which chief exec, Sergio Butcher, confirmed they are holding ‘constructive’ talks with lenders, a point which Debenhams CFO, Rachel Osborne, clarified was not Mike Ashley.

Fast forward a few hours later to the ballot results of the firm’s board elections at their AGM and the shareholder partnership of Mike Ashley and Dubai based firm, Landmark, opposed the re-election of Chairman Sir Ian Cheshire and CEO Sergio Butcher. Sir Ian immediately stood down from his position at the firm to be replaced by Terry Dudley, but Butcher will continue in his role and report to the board.

As the market digested Thursday’s news, stock value of DEB.L trickled down and in trading today, the price fell through the 4p mark and currently sits down a further 18% at 3.9422. Now here is the question… As the share price closes in on its all-time low with the firm self-imploding, does Mike Ashely flex his power further with a much touted takeover or does Debenhams end up closing its doors for business.

Ashley’s influence at Debenhams was underlined by the impact of his voting yesterday and with another major shareholder in Landmark following suit, it would be hard to imagine there won’t be an offer coming in soon. And at this point, existing shareholders may be tempted to take an offer tabled now rather than accept a lower bid once the proverbial has hit the fan.

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