DIGESTING its 29m acquisition of Roches Stores in Ireland is having a negative impact on the finances of Debenhams, with at least one analyst saying they made their move into Ireland at the wrong time.
The company, which recently hired former Bond girl Jane Seymour as the new face of the company in a hope to boost their fledgling profits, is hitting some troubled times.
Just last week it issued its third profit warning since December and says it needs to re-focus back on its British business once the Roches integration is complete.
"There is no doubt that the acquisition has affected our margins, " the company's financial spokesperson, Andy Cornelius, told the Sunday Tribune.
"But it was something we had planned for.
An acquisition like that is always going to create difficulty as you integrate one business into another, " he said.
He admitted that the acquisition has taken some of their concentration off their core business.
"Once we get the integration out of the way, then we need to get on with our new plans for the British market. All our Irish stores will be re-stocked and refurbished before the end of this year, only two are left, " he said.
Part of the problem was caused by leftover stock, the changing of the supply chains while margins at Roches were higher than at Debenhams.
"The timing of the acquisition is turning out to be far from ideal, " says Maureen Hinton, senior analyst at London-based research company Verdict.
"They hadn't upgraded many of their stores for years while that end of the market is extremely competitive. It has caught up some of their energy as well as experiencing some problems with changes in the supply chain and all the stock that was left over from Roches."
"It has increased their turnover though.
Marks and Spencers' recovery has also left them vulnerable. But all the positive signs are coming out from Debenhams now. They are putting major plans in place, " she said.
|