Debenhams finance chief quits following profit warning while House of Fraser reveals "best ever" Christmas trading


By Jessica Davies, News Editor

January 2, 2014 | 3 min read

Debenhams’ chief financial officer Simon Herrick has resigned days after the department store issued a major profit warning.

Herrick, who has been in the role for two years was reportedly under pressure after making the decision to ask suppliers for a 2.5 per cent discount eight days before Christmas, labelled a desperate measure by other retailers.

The retailer has said today that Herrick will depart with immediate effect while director of finance Neil Kennedy will become acting chief financial officer.

Debenhams' shares dropped by over 12 per cent on Tuesday after it revealed first-half profit before tax to be around £85m - 25 percent lower than the analyst consensus forecast of £110m. Underlying pre-tax profit was £114.7m in the first half of 2013.

In a statement released by Debenhams management on Tuesday they said they "expect the need for additional markdown to clear stock in January and February".

Herrick will leave his role on 7 February.

Debenhams CEO Michael Sharpsaid: "On behalf of the board, I would like to thank Simon for his hard work and contribution over the past two years. We wish him well in the future."

The news is in sharp contrast with rival retailer House of Fraser, which has claimed 2013 to be its "best ever" Christmas trading period.

Like-for-like sales rose 4.3 per cent in the first nine weeks of the fourth quarter, with like for like sales for the three weeks to 28 December surging 7.3 per cent, according to the retailer.

Meanwhile sales in stores increased three per cent in the three weeks before 28 December with Glasgow, Belfast and Oxford Street all seeing record sales performances, up 10.6 per cent, 8.3 per cent and 6.9 per cent respectively.

House of Fraser’s online sales broke its own record for online sales, which soared almost 60 per cent for the three weeks to 28 December.

House of Fraser CEO John King said: “We are delighted with our Christmas trading and are pleased to report another record performance despite a more competitive environment. November trading was strong, in terms of both sales and margin growth, with a similar promotional programme. As we expected, the peak Christmas trading came late, however it was the best we have ever recorded.

"We remain clearly differentiated with our leading branded fashion offer representing approximately two thirds of our sales. We are particularly pleased that this key part of our business was up nearly 10% over the peak period and clearly outperformed the market.

This performance demonstrates the success of our strategy to continuously improve our online proposition, develop both our House Brands and premium branded proposition and invest in our stores to give our customers the best possible shopping experience. I would like to thank all of our staff and brand partners for their hard work and support over this period.

"With the record sales and margin performance in the period and a close focus on operational efficiencies, we expect to report a further growth in full year earnings. Given the sales performance, we also expect to finish the year with a cleaner stock position and lower net debt and are well placed to deliver further growth in 2014.”

Meanwhile John Lewis also revealed favourable sales results over the Christmas period, with online sales rising almost 23 per cent year on year. Overall sales rose 6.9 per cent during the Christmas period, compared to the same period last year.

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