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Debs gets thumbs up from analysts

Debenhams is eyeing up market share from high street rival Marks & Spencer, with analysts giving the store’s strategy a resounding thumbs up.

At an investor event hosted by the retailer yesterday, “impressive and rare” detail was laid out by group trading director Suzanne Harlow and marketing director Richard Cristofoli to demonstrate the latest stage in Debenhams’ “four pillar” plans for growth.

Analysts came away from the day bullish about the department store’s prospects, with Espirito Santo and Peel Hunt among those recommending the shares.

Independent analyst Nick Bubb said: “Even the most cynical of analysts could not fail to be impressed with the quality of the refreshments and the catwalk show of the “Designers” spring clothing range.”

He noted that Debenhams’ Christmas ad campaign had achieved a 52% “emotional resonance” with customers – double that achieved by M&S and only slightly less than John Lewis.

But it was not only the ad campaign that Debenhams competed against M&S on, Bubb said.

“Debenhams’ biggest customer overlap is with M&S and it was hard to come away from yesterday’s impressive Debenhams strategy presentation without feeling that they have clear designs on grabbing more clothing market share from M&S.”

John Stevenson at Peel Hunt agreed. “[Debenhams’ strategy has] a level of clarity we believe is missing at competitors, such as M&S,” he said.

“Trading on an unwarranted 17% discount to M&S, Debenhams is one of the cheapest stocks in our universe, underpinned by self-help initiatives and strong cash generation.”

Sanjay Vidyarthi at Espirito Santo noted the store was “doing the right thing” with its continued investment in multichannel infrastructure and said there was “plenty of market share growth opportunities”, particularly thanks to designer Debenhams brands, which created a differentiated offer to the likes of M&S and Next.

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