Broker snap: Debenhams' woes are company-specific, says Numis

Analysts at Numis Securities reassured retail investors on Thursday that Debenhams' woes seem more company-specific rather than indicative of trends across the wider industry.The department store chain issued a profit warning on Tuesday that dampened sentiment across the sector after saying that additional markdowns will have an impact on its bottom line in the first half. The firm said that the "anticipated final surge in sales" in the lead-up to Christmas failed to materialise, with like-for-like (LFL) sales in the 17 weeks to December 28th rising by just 0.1%. This was "considerably light of our full-year expectations of +2.7%", said Numis analysts Andrew Wade and Matthew Taylor.In contrast, John Lewis reported a 6.9% gain in LFLs during the five weeks to December 28th, boosted by a strong performance from electricals and solid growth in fashion. Meanwhile, strong fashion trading helped House of Fraser register a 4.3% LFL increase in the nine weeks to December 28th.Wade and Taylor pointed out that both Debenhams and House of Fraser noted the "competitive trading environment" in the run-up to Christmas. "On this basis, we see scope for some disappointment from other clothing retailers, particularly those which resorted to early discounting; given its full-price commitment, we see Next at less risk than most," the analysts said.Meanwhile, they said that a strong electricals performance at John Lewis spells good news for fellow retailers Dixons and Home Retail."We are confident that the strong updates from House of Fraser and John Lewis will put them both firmly in the 'winners' column this year, but, supporting our long-held view, see enough to suggest that Debenhams problems are more company-specific than market-led."BC