Debenhams boss Michael Sharp is to step down sometime in 2016 after five years at the helm, the department store chain revealed yesterday following reports that investors wanted a change at the top.
The retailer, which has had a patchy record during his tenure, said Sharp had always intended to serve a five‑year term. “That’s always been my plan and I’m sticking to my plan,” he said.
Sharp said it would “be difficult to leave a fabulous company like Debenhams”, but now was the right time to begin a search for his successor – a process in which he will also take part.
“I hope being transparent about my intentions will stop recent speculation becoming a distraction, allowing me and the Debenhams team to focus on delivering our strategy and the important Christmas trading period,” he added.
Yesterday’s announcement came alongside a 7.3 per cent rise in pre-tax profits to £113.5 million in the year to 29 August. But City retail analysts pointed out the performance was still well down on the £139m profit posted two years ago.
One analyst said recently that Debenhams had “clearly lost its way”. Keith Bowman, retail expert at Hargreaves Lansdown Stockbrokers, said yesterday that the firm remained a “work in progress”.
He said: “The middle ground it occupies between discount and high-end clothing retailers continues to be challenging, with rival Marks & Spencer still cultivating its own recovery programme.”
Same‑floorspace sales at Debenhams edged up 0.6 per cent in the latest year – 2.1 per cent excluding currency movements. This improvement was driven by a 1.3 per cent rise in like-for-like online sales as it boosted its web and mobile app offering, but the stores themselves saw a 0.3 per cent decline.
Reports last month suggested some big investors in Debenhams were unhappy with its performance and were seeking a board shake-up after disappointing results in previous years, with City broker Cenkos said to be in the vanguard of a push for change.
Pressure on Sharp intensified in January 2014 shortly after the retailer put out its second profit warning in nine months, but at that stage the City was appeased by the resignation of the company’s finance chief, Simon Herrick.
Sharp, who has worked for Debenhams or its predecessor, the Burton Group, for 30 years, said yesterday he was “proud of our achievements” since his appointment as chief executive in September 2011.
He said he now believed the business was capable of competing “in the ever-changing and challenging world of multi-channel retailing”.
Under his leadership, Debenhams has cut back on promotions, added concessions in under-used store space, grown its digital business and expanded overseas.
In the latest year international like-for-like sales rose 1.1 per cent, including 8 per cent at its Magasin du Nord chain.