Debenhams expects to appoint a new boss in the next few weeks after Michael Sharp confirmed his resignation on Thursday.
Revealing a slightly better than expected rise in half-year profits, the company said it was in the final stages of hiring a replacement for Sharp, who has agreed a 12-month notice period starting on Thursday.
Sharp will receive full pay and benefits, amounting to at least £772,999, during his notice period and will continue as chief executive until his successor is confirmed.
Potential candidates are thought to include the former Karen Millen and Zara UK boss Mike Shearwood, the Mothercare boss Mark Newton-Jones and the former Matalan and Littlewoods boss Alistair McGeorge. Suzanne Harlow, Debenhams trading director, is a strong internal candidate who many had expected to take over, but shareholders are reportedly pushing for a fresh perspective.
Sir Ian Cheshire, who was installed as Debenhams’ chairman earlier this year, thanked Sharp for his service. “He has led the business through an unprecedented period of change for the sector, leaving the business in good shape for the future as these results demonstrate,” he said.
Sharp, who first joined in 1997 and became chief executive in 2011, announced in October that he would leave this year after shareholders agitated for a change of leadership following a string of disappointing results and profit warnings. He said Christmas sales showed his revamped strategy was working.
Confirmation of his departure came as Debenhams reported a 5.5% rise in underlying pre-tax profit to £93.8m for the six months to 27 February.
Analysts had been expecting the department store chain to post a 2.3% rise in half-year pre-tax profits to £91m.
Sales rose 1.6% to £1.63bn, with sales at stores open over a year up 1.1%, and the company revealed its first rise in dividend in three years - up 2.5% o 1.025p per share.
Sharp said: “Although there is plenty more to do, we are on track to deliver full-year results in line with market expectations. When I leave the business later this year I am confident that it will be in a good position to deliver continued sustainable growth under a strong and capable management team.”
He said the increase in the dividend was a clear demonstration of confidence in his strategy.
He said Debenhams had improved profit margins by cutting back on discounting and promoting non-clothing lines such as beauty and gifts.
Profits were also helped by a reduction in interest payments as the group cut its debts.
Sharp said: “It’s quite clear from external research that the clothing market is tougher at the moment and you can see that in consumer confidence … But we have got a strategy in place that is working and that is about building non-clothing categories,.”
Debenhams’ Christmas sales beat expectations by relying less on discounts and cutting stocks of coats and outerwear to take account of a warmer winter. Sales at stores open a year or more rose 1.9% in the 19 weeks to 9 January, compared with analysts’ forecasts of a rise of just 0.3%.
