20495_Debenhams_AR_151104

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STRATEGY IN ACTION OPERATIONAL EFFECTIVENESS We are building infrastructure that is sustainable and fit for future growth, to enable Debenhams to exploit the continuing channel shifts in retail
IT investment in FY2015 £60m Product shipped direct to partners 47% We are installing a single warehouse management system for our distribution centres in Sherburn and Peterborough. Strategic report 2-39 We are building infrastructure that is sustainable and fit for future growth, to enable Debenhams to exploit the continuing channel shifts in UK retail and drive international growth in a cost effective way. Operating costs increased by 0.6% in 2014/15 despite the further shift into online and the investment in improved online services. Our focus is on extracting productivity improvements as a result of the programme of systems investment, so as to deliver profitable growth. Investment in systems and supply chain There are two major systems programmes under way, and systems spend has increased to £60 million out of our total capital expenditure of £133 million in 2014/15. We are introducing new buying and merchandising systems, processes and practices in order to allow us more effectively to plan and merchandise ranges across the business as we grow in more geographies and channels. Equally, we are progressing opportunities to develop sourcing capabilities that recognise the need to maintain brand identity whilst maximising the efficiency of sourcing locations and factories. Our clothing buying teams are structured by brand. As an illustration of the opportunity for future sourcing efficiencies, we have benchmarked our suppliers and consolidated the buy across key volume lines in the knitwear category, which has generated a significant cost saving. We are mindful of the need to maintain separate brand identity but will look at further opportunities to introduce category buying across brands where appropriate. We are also replacing our stock management systems, moving to a single provider and with the aim of simplifying our warehouse operations to flow stock more efficiently. Currently, like many of our peers, we have separate pick faces for stores and online orders. Whilst we have put processes in place to allow us to fulfil from store for online orders, the move to a single stock view will be a significant support to our multi-channel growth. We have also made good progress in the current year to improve the cost effectiveness of online order fulfilment, with daily store deliveries on our own fleet supporting our click & collect service, which is our lowest cost delivery option for customers. Other initiatives include the successful relocation and integration of our cosmetics fulfilment operation to our distribution centre in Sherburn, enabling the closure of the separate facility. Changing the flow of stock to stores with more frequent distribution and replenishment is also enabling us to test the removal of offsite stockrooms. We continue to restructure our international supply chain to optimise stock flows. For example, we have increased direct shipping to our international partners, taking stock from suppliers via our hub in Singapore rather than via the UK, which now accounts for 47% of the total. Outlook in FY2016 We will continue to manage costs tightly across the business. Our new single warehouse management system will be operational from spring 2016 and is expected to deliver benefits from both reduced picking costs and lower stockholding. A single stock view is also likely to improve stock availability and potentially support our continuing drive to reduce markdown. Longer term we see opportunities to introduce further automation to our warehouses, which will bring additional cost savings. Over the period of the systems investment programme we aim to reduce the fulfilment cost per unit by 30% to bring us in line with best-in-class. Debenhams plc Annual Report & Accounts 2015 19
Page 1 and 2: ANNUAL REPORT & ACCOUNTS 2015
Page 3 and 4: OUR BUSINESS MODEL We aim to create
Page 5 and 6: FINANCIAL HIGHLIGHTS Gross transact
Page 7 and 8: oard has reviewed its dividend poli
Page 9 and 10: “WE HAVE BUILT A STRONG PLATFORM
Page 11 and 12: MARKET CONTEXT An independent view
Page 13 and 14: Increasing availability and choice
Page 15 and 16: In 2014/15 we set out a strategic p
Page 17 and 18: Our ambition is to grow our multi-c
Page 19 and 20: Our stores remain central to our cu
Page 21: Debenhams operates both its own and
Page 25 and 26: In addition to this, an extensive r
Page 27 and 28: Risk Impact Examples of mitigation
Page 33 and 34: Strategic KPIs Delivering a compell
Page 35 and 36: Figure 1: Financial summary Gross t
Page 37 and 38: Figure 3: Cash flow, uses of cash a
Page 39 and 40: Business share by country (%) China
Page 41 and 42: Engagement survey The results of th
Page 43 and 44: We will continue to capture more em
Page 45 and 46: DEAR SHAREHOLDER On behalf of the b
Page 47 and 48: NIGEL NORTHRIDGE Role: Chairman of
Page 49 and 50: Executive Committee Michael Sharp C
Page 51 and 52: All employees gender diversity Male
Page 53 and 54: directors, the board and its commit
Page 55 and 56: effective from 31 July 2015. Having
Page 57 and 58: MEMBERSHIP OF THE AUDIT COMMITTEE T
Page 59 and 60: Financial Officer or the Company Se
Page 61 and 62: DEAR SHAREHOLDER On behalf of the R
Page 63 and 64: LINK BETWEEN REMUNERATION AND STRAT
Page 65 and 66: What is the maximum potential value
Page 67 and 68: What is the maximum potential value
Page 69 and 70: REMUNERATION OUTCOMES IN DIFFERENT
Page 71 and 72: The remuneration package for a newl
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REMUNERATION POLICY TABLE FOR NON-E
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THE ANNUAL REPORT ON REMUNERATION T
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DIRECTORS’ SHAREHOLDINGS AND SHAR
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HISTORICAL CHIEF EXECUTIVE PAY The
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In line with FY2015, awards will be
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The total interests of the Chairman
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During the year, the Committee unde
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een made under them. The Company al
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STATEMENT OF DIRECTORS’ RESPONSIB
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The scope of our audit and our area
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Area of focus How our audit address
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Other required reporting Consistenc
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CONSOLIDATED INCOME STATEMENT For t
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CONSOLIDATED BALANCE SHEET As at 29
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CONSOLIDATED CASH FLOW STATEMENT Fo
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Supplier income recognition The Gro
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Deferred tax is provided on tempora
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The fair values of quoted investmen
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3 Segmental reporting IFRS 8 “Ope
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Retirement benefits The Group’s d
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9 Finance costs 10 Taxation Analysi
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Changes to the UK corporation tax r
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Intangible assets includes within p
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Capitalised finance costs Finance c
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20 Bank overdraft and borrowings 29
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Borrowing facilities The Group has
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iii) Foreign exchange risk The Grou
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The Group routinely monitors its ca
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The following table shows the Group
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The inflation assumption is based o
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The table below illustrates the est
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25 Other non-current liabilities Pr
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28 Share-based payments The total c
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) Executive Share Option Plan The E
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31 Analysis of changes in net debt
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FIVE YEAR RECORD BALANCE SHEETS Ass
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Responsibilities for the financial
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NOTES TO THE COMPANY FINANCIAL STAT
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Share capital Ordinary shares are c
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6 Debtors Amounts owed by Group und
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12 Called up share capital 29 Augus
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STORE LIST UK Aberdeen Altrincham A
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ADDITIONAL INFORMATION Registered o
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