Debenhams plc (lon:deb)
Debenhams – Is it as dead as the share price suggests?

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Debenhams plc Share Price
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Title: Debenhams – Is it as dead as the share price suggests?
Company: DEB - Debenhams plc
Share Price Then: 9.38p
Author: Ian Smith
Date: Tue 02 Oct 2018
Comments: Sent back to the market in 2006 at 195p Debenhams has had a slow and steady share price decline and is now at 10p, so is this the buy of the century or a duplicate of the decline HMV?

Gradually the old high street names are dying off and I sometimes wonder if it is worth going into town as there seems to be so few shops left.

However Sports Direct is doing well with both shops and on-line ordering and they own just under 30%, as I read it this stake will not be increased in the short term as this would require them to offer to buy all shares at around 48p.

By June 2019 this will have dropped to about 20p and by the end of 2019 possibly 10p or even less.

Currently Debenhams market cap is around £110m, which is not much more than the £90m paid for House Of Fraser so waiting for Debenhams to possibly go into administration by the end of next year may not yield much of saving for Sports Direct or another buyer.

It is easy to believe that the company is dead but in the June 2018 trading update Debenhams were still predicting a pre-tax profit of around £35m-£40m with £320m in debt and an intention to reduce debt and cut capital expenditure.

Cutting cap ex seems disasterous, but with a continuing trend for large stores to close, there does seem to be an opportunity to get concessions from landlords such as rent free periods where the rent is used to re-invigorate stores offsetting the reduced cap ex.

The current management seem to see a future using more space for non retail, gyms, offices for small businesses, etc along with a more upmarket retail layout.

Or do the current management have no idea and are trying a bit of everything to see what if anything sticks in their unwanted retail space?

If the management is genuinely open to ideas I could see a very successful area within the stores where genuine local suppliers opperate, an upmarket farmers and craft product market with some sort of shared staffing.
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