Financial Trading Blog
Stock of the day 15/04/2015 – Debenhams PLC
Last year ended up be incredibly flat for Debenhams, starting 2014 at £0.72 before ending the year at £0.74. 2015 has brought around more robust growth for the company, but it hasn’t been completely smooth sailing. After it revealed yet more weak sales in mid-January, Debenhams sank to £0.68 as investors fled the scene; however, since that point the company has managed to rejuvenate itself somewhat, reaching £0.81 at the start of March, and maintaining these gains to currently trade at £0.80.
(Source: IT-Finance.com 15/04/2015)
The profit warning last December was the start of Debenhams’ recent runs of trouble, with the company cautioning that its full year results would be softer than hoped. The aforementioned disappointing announcement in January made matters worse, and despite the stock’s relatively strong market growth, compared to the rest of the sector Debenhams looks decidedly weak.
Analysts are expecting Debenhams to post flat half year profits due to lower margin sales, leading to pre-tax profits of £83.5 million, a largely unchanged figure from this time last year. Despite being UK’s second largest department store, the company is struggling against the more attractive options of online stores like ASOS, as well as the recent successes of Next. It recently appointed Terry Duddy, a veteran retailer, as a non-executive director earlier in the month in order to help ease tensions with shareholders, the larger of which have been demanding improvements in the company’s sales.
After Marks & Spencer impressed investors with the mildest of improvements earlier in April, Debenhams may be able to pull off a similar trick if it can show real signs of a turnaround in its fortunes. However, analysts remain tentative over Debenhams’ fortunes, giving the stock a consensus rating of ‘hold’ and an average price target of £0.73.
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