Member Info for KNIGELK

Sains - as you say - some of these lease agreements date back to 2003 - why did posters like you not warn the thread in 2014, 2015 or last year when the share price was 60p that this would come back to bite the company - bit late in the day to suddenly appear imho. Anyway if rent costs are £222.9 million that suggests an annual increase of £ 4-6 million - which is "fine" if underlying profits stay around £33 million (at least for the next few years). Of course it depends on the number of leases that will end in the next 3-5 years and the legacy leases that have 10-15 years to go. It's manageable IF the retail environment does not deteriorate much further - if it does then it will not just be Debenhams doing CVAs...

Interesting that the rental costs in the accounts were £222.9 million compared to £221.4 million the prior year (if I am reading the note correctly). That's less than a 1% increase so I presume the company has already been pro active closing stores or reducing rental space to mitigate costs?

Except unless you are one of these landlords - we have no idea what terms their loans are on or LTV requirements etc. they may be wiggle room. Were I agree with you is that the landlords are not obliged to do anything - the ball is in Debenhams court - so hopefully they will make the first move re the relevant stores and talk to the landlords to try to find some common ground - better then going down the CVA route at a later date (perhaps)

I think they are holding off the CVA route as a last resort. They will see how the talks - over the next 1-2 years o first although of course eventually they may have no choice but it doesn't mean it will resolve the issue anyway if the landlords don't play ball. Surely the landlords would rather talk now instead of having a CVA to consider? Last point - rent is just one cost (of course the main cost after salaries). The company can try to offset rising costs by limiting salary increases, improving margins with the suppliers, hopefully talk to councils on the business rates and reduce pension contributions considering the current surplus. Read the accounts - they are trying a multiple approach of measures to address the decline including rent discussions. Anyway thankfully no one should trade on BB comment but enjoying the healthy debate. I get heated because I know some people who work at the company so desparate for the company to survive so obviously get ratty when some tear down the company (imo).

Sains, that's why £117 million was written down in the accounts for these leases. The debt headroom should assist to pay some landlords the costs of exiting the lease terms. I am wary of the company's long term prospects but have seen this company suffer at least two down turns in the last thirty years (you see I work in retail). I believe they will survive but it's not a cert. Btw most investors can only decide to invest on reading the RNSs or deciding if a share price offers value. Try to email the company and you will get a standard response. They don't intend to update the market until January

No need for the feds - but one has to be wary on new single thread posters who appear out of nowhere - although we all start from zero and I have crossed paths with Sains on other threads - so maybe I am being thick but why is Debenhams in particular suffering from these "normal" long leases then? M & S will be closing 100 stores at least - more HoF stores will close - however you would think literally every high street retailer will be up in arms with their rental commitments at this time - but are not.. (yet).. maybe it's because Next/Arcadia trade from smaller outlets so the burden is far less - but Debenhams have had large stores for 50 years so any blame should be on the past management - the new management is trying to sort the issue out - a new property and finance director have been appointed - it will take time to see if they can work their magic. I just keep repeating the line that some compromise will have to come from SOME landlords at a later date unless they prefer hundreds of empty large retail outlets from various retailers - no one should want this outcome.

You know i didn't imply that - I am suggesting that if landlords JOINTLY agree to sign up a tenant for a 20-25 year lease - they should factor in the risk profile of a default like a changing retail enviroment, interest/gilt rates, general market changes and other costs - indeed the internet was around in 2003 - just the growth has been far more than expected. Indeed you answer your own question - the fact that no one - including landlords - could have predicted a retailer like Amazon taking over a large part of the retail market makes adjusting the rental terms more fair doesn't it - for all parties concerned!

Also most here accept the current rental terms that Debenhams have with the landlords are a) historic and b) and taking into account the reality of the current retail enviroment - so i guess the LTA terms on loans related to landlords who have Debenhams as their tenant must be on different terms to probably 80% of the market were rents do get adjusted to take into account the retail enviroment or do have term breaks/do not increase by x amount every year. Not only Debenhams PAST management are to blame for being locked into these long leases - surely the landlords should have realised - at the time - that there would be a future risk of default if the trading enviroment deteriorated or interest rates increased?

Well i didn't think your initial post was clear enough... oh, and if it has nothing to do with Debenhams - then don't post it on the Debenhams thread ok?

usacpc - are you mad enough to post market sensitive information on a BB? Did you say administrators are about to be appointed due to breached LTV convenants? Is this Debenhams related or landlord related? Has the landlords own loan terms been breached or has Debenhams profits fallen further triggering a breach? Are you a landlord of a Debenhams property or not? Or just know the sector/someone who is a landlord? You need to think about what is posted or make it clearer thanks.

More negatives..can you think of any positives? Here's a few (again). Debt headroom - well within their facilities. Disposals may reduce debt. Well known brand. Growing online and overseas business. Healthy pension schemes position. Landlords would be mad and stubborn not to wake up to the reality of the retail market and compromise unless they prefer 150 empty large stores next year? No one expects them to hand out sweets but a rent annual increase cap or revised terms seems sensible in line with other retailers

Quite simple. "Landlord, this store is one of fifty we may close within the next five years due to the ever increasing rent year on year making it loss making in the near future. Do you want to talk or not? Landlord, I doubt any new retailer will accept the same terms - consider the current retail environment". Not the landlord will either agree to talk, wait or say keep paying or leave. I suspect a mixed bag of responses. May I suggest you try to come up with solutions instead of constant negatives. Any one would think you were short :-)

Maybe because no other retailer would agree to the same rental terms in the current environment so they might as well deal with Debenhams and at least try to come to some form of mutual arrangement. I repeat the company plans to close up to fifty stores over five years - not five months. They have a little more time imho before the need to consider a CVA. The retail environment may improve two years from now but landlords do not hold all the cards considering outlets are closing left, right and centre. Also there have been an increasing number of CVAa. I suspect landlords are wishing up to this tactic and will not compromise as much if this option is used

Another quick point. Even salary costs can be managed. Pay freezes, more part timers and removing layers of management etc (I suspect all these actions have been done). Some costs cannot be managed is. Living wage increases, pension costs or NI changes but these costs effect all retailers.

They have a plan. To dispose of up to fifty stor s over the next five years. Now is not the time pre Christmas to even consider a CVA - remember the landlords don't necessary have to agree to a CVA terms anyway. Not sure what's the point of hiring expensive advisors - Joe Bloggs in the street could suggest a CVA, a managed store closure program, asset disposals, cost savings or new layouts. The shorters will continue to try to spread doubt but the CEO share buy was a great bull sign imho

It's hard to work out the true value of this share now because we don't know what the 2018/19 profit is expected to me. Let's presume it's similar to this year . say £30 million (pre exceptionals) - then this is equal to a PE of 4 - very cheap. If profits have halved then the PE is 7-8 which is fair value - we might have to wait until January to get a clearer picture but it appeared clear that the share price has been oversold. Remember too that the accounts were issued on the going concern basis - that the next update is due January - the shorters who predict immediate admin are fear mongering - the company will be around for a while yet imo - but a lot depends on the Christmas trading.

Feeling a bit calmer today :-)

A real shame - some of these stores go back decades - so much for MA boast about saving stores - I'm hoping the Bath store is saved - been there around a century and the only option would be to turn the building into student flats or 4-5 luxury retail stores - there is a modern small Debenhams nearby. (this is the future for Debenhams - modern stores on 2-3 floors - but 5-6 floor stores dating from the 1960s - hence why 50 will probably close)

Thanks for copying this email - really helps. So company has no intentions - yet - to update the market before January.
I urge shareholders and those interested in supporting this company to contact Debenhams Investor Relations on the misinformation being posted online. On the other BB one poster today stated "banks are calling the shots - company about to go bust". The poster does not even say "in my opinion" any more - for whatever reason certain posters are hell bent on destorying this company and although I rarely believe posts effect a share price - it obviously have had some impact. Stating as a fact that a company is going into admin/bust is out of order - posters should always state it is their opinion - this is fine - never post it as if it is a fact. Contact IR please. People cannot simply be allowed to post whatever they like on line and get away with it. If the company is in dire straits then the company should update - the fact they do not intend to update until January is reassuring short term.

Excellent .. maybe there has been a leak? I reckon either a) quite a few shorters are closing b) the share price was simply too cheap/oversold and MMs are marking it up on retail buying or c) a RNS has been logged - could be all three!