Debenhams results analysis

[WalbrockResearch821]

Here are the following conclusions from today’s results are:
1). The “real” cost savings will be the cancellation of its dividends altogether, and the big reduction in capex to £70m would immediately save £100m.

2). Digital sales growth won’t be the saviour of the company because it cannibalises their retail store sales.

3). Today’s £300m writedowns in goodwill are LONG overdue. However, given the 80% decrease in ADJUSTED net profit in the past six years, you should expect another £200m to £300m write off in goodwill next year or spread over a few years.

4). Debenhams store closure strategy of 50 stores in 3-5 years is slow, given their dire situation, but the idea of opening 20 new ones at this stage is a little far-fetched.
If management goes ahead and opens 20 new stores, expect capex to rise in the future.
5). The retailer has no real assets, such as freehold to dispose and reduce debt. It’s why they are targeting cost savings.

6). Valuation appears cheap, despite a big decrease in profit and cash profit. Debenhams price to operating cash flow is BELOW one, compared to three times multiple.

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[spiderbill]

Looks like the waters are closing over Debenhams - down another 21% to 5p.
Suspect either Mike Ashley's waiting till they're worth nothing or he's decided they can't be saved and is avoiding them.

Glad they were a very early purchase when I was just feeling my way and only bought £500. Won't be seeing that again!

[jackdaww]

how the mighty are falling .