Debenhams’ chief financial officer quit abruptly today, just days after the department store group rocked the market with a profit warning on the back of poor Christmas trading figures.
Simon Herrick, who had held the role for two years, was already under fire after reportedly asking suppliers for a discount and a one-off contribution in the days running up to the key festive period.
The company said in a stock exchange announcement that a search to find a replacement was under way.
City retailing analysts, wrong-footed by the latest development, said that the new CFO would face the tough task of rebuilding confidence among investors after the second profit warning from Debenhams in under a year.
Herrick will receive a “golden goodbye” of nearly £500,000, comprising his annual salary of £410,000, a flexible benefits payment of £18,375 per annum and an annual pension contribution of £61,500.
The group said this will be paid in 12 monthly instalments, reduced by an equivalent amount should he find other employment in the period.
Michael Sharp, Debenhams’ chief executive, said: “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.”
Shares in the retailer have slumped almost 40 per cent in the last 12 months, with its trading woes thrown into sharp relief by a strong performance from rival department store group John Lewis over the Christmas period.
In a statement on Tuesday, Debenhams cut its first-half profit forecast by 25 per cent to about £85 million from £114.7m the previous year, after a last-minute Christmas shopping surge it had pinned its hopes on failed to materialise.
The group, Britain’s second biggest department store business, blamed the latest profit warning on highly competitive price-cutting on the high street. It resulted in its same-floorspace sales edging up a dismal 0.1 per cent in the
17 weeks to 28 December.
Sharp said this week that the chain was battling against an “extremely difficult” trading environment. He also cited bad weather hitting clothing sales.
Numis Securities said in a note: “While there is undoubtedly some truth in this, we believe that Debenhams’s major issues are more company‑specific.”
Other analysts said the retailer had already been struggling as it failed to keep up with rivals including John Lewis, House of Fraser and fashion retailer Next. The latter is due to report on the Christmas period.
On New Year’s Day, John Lewis, the employee-owned department store group, reported like-for-like sales up a shade under 7 per cent in the five weeks to 28 December. House of Fraser has said its sales climbed 7.3 per cent in the past three weeks.
One analyst commented: “There is no quick fix at Debenhams. All retailers are operating in a difficult environment, but some are making a better fist of it than Debenhams currently.
“The share price doesn’t lie over the past year and more.”
The stock, which has steadily fallen over the past three months, closed today up 2.2p at 75.2p.
Debenhams said it would have to offer more discounts in January and February to clear stock. Poor trading at the start of 2013 saw its profits fall 2.7 per cent to £154m in the 12 months to end August.
Neil Kennedy, director of finance, will become acting chief financial officer on an interim basis while the external search for a new CFO goes on.