20495_Debenhams_AR_151104

CHIEF EXECUTIVE’S
REPORT CONTINUED
Our exclusive
Hammond & Co.
collection from Savile
Row tailor Patrick
Grant was extended
to 98 stores following
its successful launch
last year.
Q. What are the key drivers for
growth in international markets?
I see a number of potential drivers for
international growth. Our store chain
in Denmark, Magasin du Nord, is
consolidating its market leadership and
has delivered a year of exceptional
growth. We expect continuing positive
momentum this year. The Republic of
Ireland remains a challenging market,
but our teams are working hard to
deliver a great customer experience.
We continue to open franchise stores
in both new and existing markets, with
continuing opportunities in the Middle
East, balanced by growth in newer
regions in the Far East and Eastern
Europe. We are testing new channels to
market which have exciting longer-term
prospects: this year we will offer some
of our international online customers
local language and local currency
websites; we are entering Australia with
a new multi-channel model; and
following some successful trials we see
potential for some of our own brands to
be sold outside of Debenhams, giving
us another leg of growth.
Q. Is the infrastructure ready
to cope with growth internationally
and via multiple channels?
We are part way through a multiyear
investment programme that will
deliver an infrastructure to support
profitable international multi-channel
growth. We are minimising risk by using
tried and tested systems and phasing
implementation of the programme. We
have excellent warehousing facilities but
investment in further automation will
drive cost and service efficiencies in the
future and support our expansion plans.
Q. What are the key challenges and
opportunities for the Group in 2016?
Having made good progress on
our strategic priorities for 2015 I am
moving the focus on for 2016. We have
five new stores opening in the UK this
autumn and we are making sure these
are compelling, exciting and fun places
to shop. Our Bradford store will be the
only department store in this major
city, which is among the top 30 retail
markets in the UK. We have exciting
new and extended brand offers, such
as Nine by Savannah Miller, Hammond
& Co. and Principles – which all feature
in our “A match made in Debenhams”
advertising campaign which has
launched this season. Our space
optimisation programme is moving
from trial to implementation, and
performance of our new brands and
new concessions over the Christmas
peak will be a key test of the strategy.
We will have filled at least half the
identified space by next spring. We
now offer top quartile service for our
multi-channel customers and there is
plenty more to go for both in the UK
and overseas. While we expect the
market to remain competitive, we are
in good shape to build on last year’s
strong performance over peak trading.
Q. How can Debenhams continue
to compete in a changing retail
marketplace?
Rather than just looking to play
catch-up with the competition we
have thought hard about the skills,
capabilities and investments needed
to ensure Debenhams remains relevant
and competitive for the foreseeable
future. The decisions we are making
about allocating our resources
effectively are focused on how we
can continue to add value for our
customers, how we maintain the
differentiation of our brand, and
grow profitably across channels
and geographies.
Q. What are your plans to deliver
longer-term growth in the business?
In the UK our focus is to maximise the
performance of our store portfolio and to
exploit our opportunity within the channel
shift online. As a one-stop shop for a
broad choice of international and exclusive
brands across fashion, accessories, beauty
and homewares, we are in a tremendous
position to drive multi-channel growth.
Internationally we have the opportunity
to drive growth via a number of different
models, all of which are cost and
capital-light. We expect to continue
to generate good cash flow, giving us
a strong platform to drive long-term
sustainable growth for our shareholders.
MICHAEL SHARP
CHIEF EXECUTIVE
22 OCTOBER 2015
6
Debenhams plc Annual Report & Accounts 2015