The Debenhams chief executive Michael Sharp is to leave the high-street retailer, he has revealed, amid rumours that shareholders had been pressing for his departure.
Mr Sharp, who is now in his fifth year in the role, said it had always been his intention to do the job for that time and now was the right moment to begin finding his successor, so that he could leave the department store chain in 2016.
The update to the City came after speculation surfaced last month that Debenhams was facing investor unrest. Milestone Resources, Schroders and Old Mutual were all rumoured to be pushing for a board shake-up.
Mr Sharp denied that shareholder pressure had prompted him to part with the company where he has worked for 25 years.
He said: “I hope being transparent about my intentions will stop recent speculation becoming a distraction, allowing me and the Debenhams team to focus on delivering our strategy and the important Christmas trading period.”
Analysts at the broker Stifel said his “intention to resign is from a position of strength, with the business delivering on its priorities”.
Internal and external candidates will be considered for his replacement. Some analysts think Debenhams’ trading director, Suzanne Harlow, could be a strong contender.
The announcement of the boardroom change came as Debenhams posted a 7.3 per cent rise in pre-tax profit to £113.5m in the year to the end of August. The shares rose 2.65p, or 3.27 per cent, to 83.80p as the City welcomed a 2.1 per cent rise in like-for- like sales at constant currency. Total group revenue increased by 0.4 per cent to £2.3bn.
The growth was helped by an 11.4 per cent jump in online sales to £388.2m and a successful and profitable “Black Friday” last November – one of the biggest shopping days of the year.
The retailer has suffered a tough couple of years amid intensifying competition. It was forced to issue a profit warning in 2013.
But Mr Sharp said it had “delivered profits in line with market expectations” in the latest financial year.
During the period Debenhams – which is trying to shake off its image for constant discounting – reduced its days on promotion by 17. It also filled up a chunk of 1 million sq ft of space with lines that offered the opportunity for higher profits.
The company enlisted the bakery chain Patisserie Valerie and pan-Asian restaurant Chi Kitchen to help boost footfall in some of its stores, while it added a number of Sports Direct concessions across its shops – although Mike Ashley, the owner of the sport chain, described Debenhams as “crap” earlier this year.
During the current year five new shops will open, including in Rugby and Bradford. There are currently 248, of which 161 are in the UK.
Mr Sharp said it was “an encouraging start to the year”, and added: “We are in a good shape to build on last year’s performance”
Russ Mould, investment director at the stockbroker AJ Bell, said Mr Sharp’s decision to step down “comes just as the retail giant is beginning to see tangible benefits from the strategic changes he has put in place”.
