Debenhams and M&S shake-ups fail to restore halo of Christmas past

DEBENHAMS and Marks & Spencer are tipped to be the big losers on the high street this Christmas despite a raft of promotions to try to lure customers through their doors.

Veteran retail analysts Freddie George and Kate Calvert at Seymour Pierce have warned that Debenhams’ department store chain has lost its “halo” when it comes to beauty products and that its promotions in the run-up to the big day have not given it the “commensurate uplift” for which it had hoped.

On Friday, Debenhams unveiled £180 million in price cuts for its Boxing Day sale, including 50 per cent discounts across all its departments for two days.

Chief executive Michael Sharp said: “This year we’re offering shoppers our biggest ever half-price sale.”

George and Calvert also expressed concern over M&S, which reshuffled its management team last month after posting a 10 per cent drop in first-half profits.

The company promoted lingerie and beauty director Frances Russell to the role of womenswear director, replacing Annette Browne. Victoria’s Secret chief creative officer Janie Schaffer will join in the New Year to replace Russell.

George and Calvert said: “M&S will not be able to recover the ‘lost’ sales in womenswear in October and November, despite a ‘friends and family’ promotion prior to Christmas.”

The pair also warned that food retailers will come under pressure because one of the key shopping days falls today, constraining supermarkets with Sunday trading laws south of the Border.

But Seymour Pierce believes this year will be an “electricals Christmas”, with Amazon’s Kindle Fire HD, Apple’s iPad and Nintendo’s Wii U appearing under Christmas trees.

“Strong electrical sales in November mean we already know that 2012 will be an ‘electricals’ Christmas, helped by a strong aspirational product pipeline, though stock clearance by Comet’s administrators may hit margins short-term,” said George and Calvert.

“Comet’s demise, however, is a major positive for the electricals sector and Dixons is expected to be the main beneficiary in 2013.” Dixons owns Currys and PC World high street stores.

Yet Richard Curr, head of dealing at Prime Markets, warned investors against piling into Dixons’ shares.

“Traders take the view that the market share of the now defunct group should all fall into Dixons’ lap,” said Curr. “But it should be remembered that online competition such as Amazon not only continues to grind down the margins in the sector but still has plenty of capacity for further reductions given the comparatively low overheads.

“Even if a mega-bull run for the retailer continues into 2013, there will be a pause, or even a limited retracement, before any further upside materialises, if for no other reason than the markets will first want to digest the result from the most important trading period of the year.”