Personally, I think the future for Debenhams is looking like
it is going to be online based, if new strategies are not increasing sales and
shares. I also feel Brexit has taken a toll on the company, as the prices have
been decreasing since the Brexit vote (June2016) , making the value of the
pound weaker, being an advantage for tourists as it is cheaper for them.
If I could have gone back I would have changed my shares
from Debenhams. The company itself usually does well, and I expect it to pick
itself back up after going through turmoil with the shares, but it seems this
year it has lasted longer with less shares. I would have chosen an online
retailer such as ASOS, they have a large customer audience and their charts
showing how much increase they have been making already in 2018 (ASOS PLC,
londonstockexchange.com January 2018). as e-commerce has rapidly grown over the
years and has become more popular than the stores, as consumers find it much
cheaper and efficient.
Debenhams competitor, Marks and Spencer have been quite
successful in their shares, however also taking a dip down in early December
along with Debenhams, picking majorly picking it up near Christmas also. At the
end of Christmas Debenhams and its competitors “co cheer” according to
(independentnews.co.uk, January 2018) Debenhams just won over marks and Spencer’s
with sales rising to 3.5% like-to-like sale and marks and spencer’s with just
2.3% like-to-like sale. Marks and spencer have decided to expand on their
online grocery services with better “availability and ranges”
(independentnews.co.uk January 2018), to compete with new competitors.
According to ‘The Guardian’ in recent news, “Debenhams cuts
jobs and store are closures likely after disappointing sales.” (Thegaurdian.com, January 2018). Shares have
considerably dropped by 15%, the lowest they have been since 2008. However, the
online sales grew up to 21.4% days before Christmas (Thegaurdian.com, January
2018). To replace the loss of the stores Debenhams will have to focus on
improving their online shopping. As e-shopping has developed over the years and
consumers can now ‘shop on the go’ with their smart phones.
Overall, the graph shows, the unsustainability of the
shares. There was a minor fluctuation during December where it reached to its
highest of 85.79 shares, through late Christmas period, that only remained as
peak as it did for less than a week. The shares slowly started to dramatically
decrease after Christmas and into the new year. From the start of monitoring
the shares, Debenhams never managed to match with the FTSE 100 index and
continued to decrease from October.
There is a low threat towards Debenhams as it has been
established for a significantly long time and has gathered repeat business from
loyal customers, with a reputation as a British brand. For new competition it
will take them a while to gain customer trust.
Threat of new
For Debenhams this could be a customer switching to another
company that offers the same products and services, affecting the business’
Customers take control and demand supply. if competitors
have cheaper prices they would go to the opposing store instead, therefore for
Debenhams to remain in the competition they must compete with their rival’s
Debenhams source their products from suppliers functioning
in 928 factories, with all diverse markets around the world
(Sustainability.debenhams.plc.com, January 2018). The company has a set of
rules to ensure their suppliers are paid an equal wage and are not exploited.
The requirements are merged into the supplier’s conditions of trading.
(Sustainability.debenhams.plc.com, January 2018).
“Porters five forces are a tool for understanding the
competitiveness of a business environment and for identifying potential
profit.” (Mindtools.com, January 2018). When you understand the forces, you
will be able to adjust your strategy according to where profit to be made
(Mindtools.com, January 2018). Competitive rivalry, Debenhams have 3 large
rivals John Lewis, House of Fraser and their main one Marks as both
multinational retailers are listed on the LSE. Evidentially the quality and
services of Debenhams exceeds those of their competitions scoring (3.7*) shown
by their ratings, as their opponents are behind scoring Marks & Spencer
(3.4*), John Lewis (3.4*), House Of Fraser (3.2*) (Reviews.co.uk, January
Porters 5 forces
flexibility of multinational markets. Economic-
UK economy does not assist in the performance of the retail area. Social- continuous growth in branded
shopping. Technological- Constant
increase in online shopping and easier shopping with ‘click and collect’.
PEST stands for Political, Economic, Social and
Technological. The analysis asses the full factors relating to your business
situation. Helping you regulate how the factors will affect the long-term
performance of the business (Pestleanalysis.com, January 2018).
I see a lot of potential opportunities in Debenhams for the
£15000 to be invested in. I imagine it to be used for a new strategy to
increase the sales, as the company continuously come up with approaches that
the support sales. Debenhams are a highly customer focused brand that develop
their ideas into something that they will know customers will want and use.
Such as their new project to have an instore gym (Theretailbulletin.com,
January 2018), which I believe will be successful as the stores are already
leisure oriented and now being expanded for fitness. This shows how well the
company understands the business market, as they know to provide for customers first
and that they are the reason for company’s continued growth, knowing that profits
will thrive in return.
Why invest in the
The company’s net worth after taxes in 2017 was £49 million
and a turn over of £2.3 million (city (Citywire.co.uk, January 2018). A sales
increase of 13.9% has increased over the Christmas period, which online
shoppers were responsible for, as many are turning digital to shop. The store
chains had a rise of 3.5% in sales over 18 weeks, with a sustained number of
cosmetics being sold (Telegraph.co.uk, January 2018).
According Debenhams CEO Sergio Bucher
“Debenhams is making a good progress with implementing our new strategy.”
(Uk.businessinsider.co.uk, January 2018). which is a great pick up by 3.3%,
from last year as sales falling 1.5% and the store shifting more towards online
distribution contributing to its sales rises (Uk.businessinsider.co.uk, January
Debenhams is an international, British 18th
century founded retailer, that operates in a department store format. With more
than 240 franchise stores in 27 countries including the UK and Ireland. Selling
a range of products, from homeware, clothing, health & beauty and an
instore restaurant (Debenhams.com, January 2018). Throughout the years
Debenhams have been in and out of the London Stock Exchange. Their first
joining in 1998 and the most recent re-joining to LSE was in 2006, leaving from
a private association named ‘Baroness Retail Limited’ that they had joined in
2003 (Debenhams.com, January 2018). When they remerged, Debenhams market sales increased
in the first 52 weeks from May to September by 6.6%, being a major contrast
from previous year where they had only increased by 0.5% (Marketft.com, January
Background of the
For this task I have been given £15,000 to invest in a
public listed company of my choice, within the London Stock Exchange. I have
chosen the company Debenhams. I will be comparing the business to its main
competitors, monitoring the rate of its performance from 26th
October 2017 to the 4th of January 2018, also analysing what would
have caused the variations of the price of and share value to change, which I
will display on an excel spreadsheet and chart. The report will show me
demonstrating the worth of the investment, whether it will prosper or
fail. I will also be discussing the
reason I chose this company and destructing it into certain factors to make it
simpler to understand where it is at now and differentiate the business.
Stock Market Report Debenhams