Is Debenhams Pulling a Fast One Blaming the Weather?

Debenhams announced some devastating figures this week, attributing the 85% fall in bottom line pre-tax profits the fall to the final trading days of the period when bad weather forced the business to temporarily close around 100 stores.

This came as a hammer blow to investors and employees as 'only' a 50% fall was forecast was predicted

The retailer cited a “disappointing Christmas season” behind the fall in underlying earnings in the UK, which were down 39.3 per cent for the half year, according to an article in the Retail Gazette

Carol Spencer who developed the personal shopping experience for Debenhams in the 90's told Wake Up to Money podcast when asked if the artic winds were to blame.

"I don't believe it (the beast from the east) would have an effect. A short term effect yes, but they were in trouble way before then. People want an emotional connection that you can't get online. Toys R Us have suffered. That massive warehouse effect of shopping is not want people want. That’s what a website is, a massive warehouse." 

Carol has a point. We need to radically rethink the whole monolith department store model. People are needing an emotional attachment to everything now, we're even given virtual carte blanche to travel on planes with our dogs because we're such fragile snowflakes. 

Though Debenhams are showing some signs of reimagining their bricks and mortar model. They may have been slow out of the blocks converting their catalogue to an online shopping experience, but they have made some small steps in consolidation of surplus floor space, their latest opening in Wolverhampton is much more compact and streamlined offering a more intimate customer experience. 

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But who is getting right? After all not every e-tailor is getting right neither as we highlighted in the demise of a A Suit That Fits. I asked E-Commerce manager for a multitude of companies and Editor of Maketh the Man, Anton Welcome about the future of retail and what brand is getting it right. 

"In my opinion it's John Lewis from a department store point of view their values resonate through everything they do. Their website generates a lot of revenue they are growing a lot faster than competitors with a lot less store footage. They have 50 stores on their portfolio but they have an online business that will cater to their demand and it's a brand that will deliver products to stores that customers can get to. Best of both worlds, lovely balance." 

And the future of retail? 

"Look, speed is everything. Let's just say if Amazon had stores we'd be in trouble. They are a ruthless, scary evil. A necessary evil, but very scary how powerful they've become. It's always been survival of the fittest, you're not going to stop Amazon anytime soon. The whole beauty of competition is that you have to do it yourself and do it better than them."

In other news

Away from Debenhams shirt seller Charles Tyrwhitt has announced losses of £5.9 million on revenues of circa £200 million as an IT blunder saw the company hemorrhage £7.3 million. And most recently House of Fraser is expected to announce a CVA (company voluntary agreement) to avoid falling into administration. 

 

What the Hell is Going on With A Suit That Fits?

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As many of you know by now, one of my competitors* A Suit That Fits has collapsed into liquidation. In a very informative article by James Hurley of The Times, Daniel Warwick, the companies’ director, has blamed a weak retail environment, higher import prices linked with Brexit and an earthquake in Nepal, where its clothes are produced.

The brand was launched in May 2006 and were very transparent with their model of having their production in Nepal, even citing their generous payment methodology of paying it's foundry workers and seamstresses over 50% the average local wage. 

The idea initially being you can get measured by appointment by a local stylist, pick your cloth and styling, and have a suit turned round in 8 weeks. If you needed additional fittings (which of course you would) then that would be dealt with by their own alterations department which would take up to a month. Alternatively, you could measure yourself and order an e-Suit through their website. 

ASTF (A Suit That Fits) ran into trouble into 2013, fell into administration and was sold for a minute sum to a person called Keith Watson who decided to resuscitate the business through crowdfunding promising a ROI of over 9 times the share price. Third parties at the time pointed out to Crowdcube (the equity investment platform) that the directors’ previous insolvency had not been disclosed to prospective investors.

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As well as the article by James Hurley, I thoroughly recommend that you read this blog post by the Equity Crowd Funding Experts who deliver an excoriating assessment on the character of Keith Watson. Almost a crusade of sorts to deliver the man from the shadows into the gallows. 

'Round about 2012 ASTF used the services of an accountant, Keith Watson. Now it turns out that Watson was in the market for a failed company and was the only offer the administration for ASTF received. He paid a few thousand pounds for the business. Keith we will meet again.'

I've reached out to DW Clothing Limited, the trading division of ASTF for a comment but they have not got back to me. They have also failed to update their website and at the time of writing, have not issued a statement on their social media. 

My personal view is that Brexit has become this axiom for companies struggling to justify their lack of sales. Some sources and competitors I know have informed me that Brexit has boosted sales, especially internationally thanks to the weaker pound. Retail is tough but then ASTF was not shackled into any leases, no bricks and mortar so I'm not sure how they managed to hemorrhage so much investor capital. 

They might want to look at how dated and their platform has become. The tutorials offer zero personality and when it comes to augmenting the styling, it's an increasingly frustrating and tedious procedure. Not to mention all of a sudden, that 2-piece suit that you were promised for under £300, has now spiraled into 5, 6 or £700. Which is still not a bad price for a bespoke 2-piece, but all of a sudden you have to question its USP. 

Plenty of thoughts on this, very keen to rant on the podcast that's currently in the making. Stay tuned. I'll leave you with the last review posted by a customer on the services of ASTF found on Trust Pilot

'I ordered two separate set of multiple suits worth well over £3000 and they are refusing to repay me claiming that the company behind the brand is in liquidation, yet offering to complete my order. A task they have failed to accomplish in the last few years. The staff are rude and unhelpful and purposefully misdirect and lie in regards to support queries.'

*I use the word competitor here loosely. I sell ready to wear suits with 100% British Wool fabric for £250 on my e-commerce site Hawkins and Shepherd.