Debenhams slumps on UBS downgrade
Shares in retailer Debenhams were under pressure after UBS downgraded the stock to ‘sell’ from ‘neutral’ and cut its price target to 70p from 90p.
Debenhams
1.83p
15:45 08/04/19
FTSE 250
19,828.09
16:10 26/04/24
FTSE 350
4,472.26
16:10 26/04/24
FTSE All-Share
4,425.57
16:10 26/04/24
General Retailers
3,912.01
16:04 26/04/24
The Swiss bank said its ‘Evidence Lab’ survey suggests customer intention to purchase in the next 12 months has seen the most significant decline among peers.
“Shopping intentions for Debenhams are at the low end of both clothing and homewares retail and the company scores below the sector average for retailers with regard to low prices and good value.”
It said Debenhams is a business that has accepted the need for change but appears to be struggling in the execution.
UBS said it has an average of over 20 years on its leases, stores which are around 15% too large and customers who have been inundated with promotions and are consequently no longer prepared to pay full price.
“We suspect the movement away from these promotions will drag further on like-for-like and reduce our FY16E and FY17E LFL by 0.5% accordingly. The resulting gross margin gain has been disappointing, with only around 10-20 basis points expected in FY15E.”
At 1008 BST, Debenhams shares were down 5.5% at 77p.