Debenhams shares continue to struggle

Following disappointing figures reported in 15 April’s trading update, shareholders will be hoping for more to cheer about on Friday when the company is due to announce an interim management statement.

Entrance to a Debenhams store on Oxford Street in London
Source: Bloomberg

The high street has become a very difficult place in which to succeed, as a number of companies have recently reported dropping footfall figures. The migration away from shopping in person to shopping online line is becoming increasingly clear, and Debenhams is not immune from this trend. That being said, the slight improvement seen in the economy of late and the increased spending power of retail clients, coupled with the slightly more conducive weather conditions, should help.

It is likely that CEO Michael Sharp and the board will be bombarded with questions regarding how they propose to ensure the poor planning of last year’s sales strategies are not replicated. It is also likely that they will be asked what the board thinks or knows about the book-building of Debenhams shares by Mike Ashley, the flamboyant Newcastle United and Sports Direct owner.

Current levels look key for the share price, as it once again tests the support of the December 2013 lows. It has moved into oversold territory again but fundamental improvements will need to be seen to warrant a move higher. A close below 70p would once again raise fears over the company’s long term hopes.

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