Debenhams - are things getting worse for the high st?

Tuesday, 19th June 2018 09:40 - by Reflect & Prepare

So its seems results from Debenhams are not getting better, as the high st. continues to crumble. This massive name looks to be one of the hardest hit as the share price is at practically to lowest point in its trading history. This morning the Co. reported group like-for-like sales over 15 weeks down 1.7% and group gross transaction value for 41 weeks down 1.6%. The only ray of sunshine is the online business which is 16% higher over the last 15 weeks. 

In terms of forward guidance the CEO doesn't expect much to change and I for one am not looking for a high st. miracle. The Co. have revised their forecasts saying 'We have reassessed our expectations for the balance of the year and now expect pre-tax profit for FY2018 to be in the range of £35m-£40m, with EBITDA in the range £160-£165m. This compares with current market PBT consensus of £50.3m'

How can this business sustain itself? I believe the only way is for a reduction in rents. This not very likely to happen but commercial rent feels like a toxic problem, shop after shop is closing down and the only business that seems to be holding up is the hot beverage kind. We cannot have a street full on cafe's. Its up to the industry to sit down and work out how they can reduce margins to compete with online stores. One thing is for certain its not happening any time soon.