Midas share tips: Debenhams | Shanks
The Mail on Sunday's share-tipping column reports on a rehabilitated Debenhams heading back to growth and updates on Shanks.
Growth: Midas expects Debenhams to stage a robust recovery into next year
You can also sign up to our premium investment zone, which includes more than 150 exclusive share tips a year for just £10 a month.
Half of the British public shops at Debenhams. The company has more than 150 stores, which attract more than 26m customers a year.
As with most department stores, the Christmas trading period is the busiest time of the year.
This month, the company will hope to persuade millions of consumers to part with their money, buying presents for family and treats for themselves.
Achieving this will not be easy. Shoppers are nervous about the future and competition on the High Street is fierce.
But Debenhams has certain advantages that have helped it over the past year and they should continue to do so during this crucial trading season.
Founded in 1813, the company was relatively untroubled for its first 190 years, but the past six have been turbulent.
Acquired by a private equity group in 2003, it returned to the stock market just three years later, but within 12 months it was struggling.
Floated at 195p in May 2006, Debenhams shares fell as low as 23p a year ago amid mounting concern that the company might not survive the credit crunch.
These fears proved misplaced. Over the summer the group under chief executive Rob Templeman sorted out its finances, raising more than £300m through a share placing and renegotiating bank facilities.
Equally importantly, Templeman and his team have been reducing the reliance on concessions and increasing the amount of goods sourced and sold directly.
Concessions operate like ministores. They provide variety and interest for shoppers but they are less profitable for the group than directly sourced merchandise.
The company has also been attracting customers through its Designers at Debenhams range, where well-known names design clothes, shoes and even house and kitchenware specifically for the group.
In the year to August 29, the company lifted pre-tax profits 13.7% to £125.2m, fuelled in particular by strong demand for the Designers at Debenhams goods, which tend to be cheaper and more accessible than top-of-the-range designer items.
In November, Debenhams provided further proof of its rehabilitation with the acquisition of Magasin, Denmark's leading department store chain, for £12m - a bargain as the business was acquired from a group of cash-strapped Icelandic banks.
›› Midas verdict: Debenhams has been through the wringer over the past year, but it is on a robust footing now and should make more advances over the next couple of years. Templemanis ambitious and wants to take store numbers from about 160 to as high as 230. Further expansion overseas may also be on the cards.
Early 2010 will almost certainly be tough for retailers as fears of unemployment and higher taxes weigh on consumers' minds, but Debenhams is gaining market share and making progress even through hard times. When conditions ease, it should benefit further. At 83p, the stock is a buy.
Most watched Money videos
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- Fiat pledges to cease grey car production as they launch new EV
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Land Rover unveil newest all-electric Range Rover SUV
- 2025 Aston Martin DBX707: More luxury but comes with a higher price
- How to invest for income and growth: SAINTS' James Dow
- Mercedes has finally unveiled its new electric G-Class
- Mini celebrates the release of brand new all-electric car Mini Aceman
- Blue Whale fund manager on the best of the Magnificent 7
- Mini Cooper SE: The British icon gets an all-electric makeover
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- Don't ditch name and shame plan - it has the City running...
- BUSINESS LIVE: BoE base rate decision; ITV eyes ad market...
- Avon Protection handed £38m gas mask contract by MoD
- Ford confirms it will cull another of its best-selling...
- Hedge fund tycoon's £34m silver salvage claim sunk at the...
- Millions kept in the dark over City watchdog's mystery...
- TSB to close one in six branches: More than 6,000 shut by...
- Spring property bounce is a damp squib - Rics estate...
- Watches of Switzerland buys Italy's Roberto Coin Inc for...
- Snoop Dogg cannabis firm to ditch London after losing 97%...
- Ford boss says it may restrict petrol models in the UK to...
- Why we need more than a British Isa to move the dial on...
- Mortgage rates are climbing again - should we be worried?...
- We do need to resolve inequality admits £8m-a-year...
- Drivers abandon Direct Line after insurance premium hikes
- Controversial Brewdog founder James Watt steps downs
- Used car sales hit a five-year high as fresh supply of...
- ITV hit by Hollywood strikes as it pins hopes on Euros...