Debenhams managing director of fashion and home Steven Cook is taking a regional and personalised approach to driving growth.
“What attracted me to Debenhams was there was an appetite to change. As challenging as the marketplace may be for retail, this is a business that has an appetite to evolve,” says Steven Cook, managing director of fashion and home at the beleaguered UK department store chain.
There has been plenty of upheaval at Debenhams since Canada native Cook joined in 2017 from Canadian luxury retailer Holt Renfrew. In May of last year, creditors approved a company voluntary arrangement, paving the way for 22 store closures with a further 105 stores subject to rent reductions and lease negotiations.
The insolvency process played out on the business pages of national newspapers and led to the departure of chief executive Sergio Bucher the same month.
Bucher was replaced by the department store’s newly appointed chief restructuring officer Stefaan Vansteenkiste in August – a decision described as “risky” by experts on account of his lack of retail and product experience. Debenhams is now understood to be hunting for a replacement CEO.
During this time, Cook, who began his career at Burton Group and has since led the product teams at Calvin Klein and Sears Canada, has been a constant. He has steered the business’s 530 strong home and fashion team through a turbulent turnaround that now faces the new threat of coronavirus.
When Drapers meets him earlier this spring at Debenhams’ new offices on the top two floors of its Oxford Street store, the concerns around coronavirus are mainly over Chinese manufacturing and supply chains. As the situation intensifies, and the government orders all non-essential stores to close and UK residents to stay at home and avoid social contact, Debenhams is adapting to reduce the impact on the business.
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This includes asking landlords for a five-month rent holiday, as well as seeking further store closures and rent cuts as part of the CVA, reducing stock intake and temporarily closing stores as well as sending employees who can, to work from home.
Cook tells Drapers he expects the business to “manage through this period – with a clear action plan, supportive investors and an experienced leadership team”, as “all retailers face unprecedented pressures” from the spreading pandemic.
Amid all of this he has been busy innovating where a restricted turnaround budget allows, rejuvenating the own-brand offer, driving online growth and taking a regional approach to Debenhams’ store portfolio.
In its most financial results for the 26 weeks to 2 March 2019, group EBITDA before exceptional items dropped 36.3% to £65.9m year on year. UK store sales declined 7.4%, but digital like-for-like sales were up 2.5%. The group is expected to announce its full-year results for 2019 in the first quarter of this calendar year.
Since the CVA the department store chain has received £50m in financing from lenders to support liquidity through third-quarter peak trading and an extension to a £200m refinancing deal agreed in March.
Despite facing its own internal challenges, and a wider backdrop of retail uncertainty, Cook believes Debenhams is resilient.
“I am still amazed at the support for this brand with all of the headlines in the press,” he tells Drapers. “The CVA announcement in consumers’ eyes was probably the biggest headline but we traded well at expectations through peak and consumer data is saying there’s not much of a negative impression.”
In October 2018 former CEO Bucher announced that 50 stores were considered a closure risk over a five-year trajectory – a number Cook says “doesn’t necessarily bode not true for the future”.
He explains: “There is not a magical master list [of stores to close] that exists – although everyone loves to ask. It’s really a case-by-case basis. The CVA put us in a good position to have those discussions [with landlords] and review things properly.”
In January, 19 stores shut their doors for good. Debenhams’ total UK store count now stands at 142.
There is so much more opportunity in these secondary markets
One landlord agent is critical: “The way to get landlords on your side in terms of any form of concession is to have a plausible business plan. If you consistently go cap in hand and say, ‘I’ve got too much debt’, where is the incentive for landlords to help you out?” Debenhams tells Drapers it deals directly with landlords.
Rent negotiations between retailers and landlords are now almost universal on the high street – retail property owners also have to face the reality of the coronavirus shutdown. Nevertheless, industry experts Drapers spoke to for this interview raised a common complaint: Debenhams’ strategy seems unclear to the consumer, and to the market.
This raises questions about its long-term future, when the industry is evolving to a model in which a traditional department store is increasingly outdated.
Debenhams is tackling these issues on all fronts, Cook counters: “Department stores have got into [stocking] the same brands [as each other] in a very major way. We’re governing ourselves as such that you remain nimble.”
Debenhams has around 50 wholesale brand partners and 40 concession partners, and an additional 100 brands that are online only. Concessions account for about a quarter of overall sales.
Fashion accounts for 65% of Debenhams total UK sales. Womenswear makes up 60% of fashion sales, menswear 30% and childrenswear 10%. It has a sizeable roster of own brands.
Debenhams’ own brands include
- Azure by Debenhams (swimwear)
- Daniel Rynne*
- Faith (footwear)
- Good for the Sole (footwear)
- Gorgeous DD+ (lingerie)
- Hammond & Co by Patrick Grant
- HCFG by Hannah Gibbins*
- J by Jasper Conran
- Kate MacMahon*
- Maine New England
- Nine by
- Savannah Miller
- Racing Green
- Red Herring
- Shelby & Sons
- Star by Julien MacDonald
*winners of Debenhams’ Emerging Talent Award
For autumn 19, Debenhams launched new own-brand womenswear label Kley and rejuvenated its own-brand menswear offer.
Kley offers a younger-than-usual take on womenswear for Debenhams. It is more contemporary and has a more premium feel than house brands J by Jasper Conran and Principles. Key categories for spring 20 include footwear and athleisure/loungewear. The initial launch in September included 125 styles across all categories – from jersey tops and on-trend midi-dresses to ankle boots and leather accessories – in a palette of khakis, dark dusky pinks and creams. Prices range from £20 to £220.
It received a wave of positive press coverage, and Cook reports that 29% of Kley sales were from new Debenhams customers, and 41% come from online.
I see us being the stalwart of the department store that stands for quality and customer experience
The menswear own-brand relaunch in October focused on creating clear brand differentiation. Collection was axed and replaced with 1778, a new casual workwear label designed to create a staple wardrobe for Monday to Friday.
Premium brands J by Jasper Conran and Hammond & Co by Patrick Grant were refreshed, alongside mainstream labels Maine New England, Mantaray and Red Herring.
Retail prices for 1778 range from £8 for a T-shirt to £90 for a quilted jacket. Across all menswear ranges, this extends to £160 for a duffel coat from Hammond & Co.
“We’ve been making a lot of changes and we continue to exit things and fine tune,” says Cook. “It’s imperative that we do that because newness sells but there’s that fine line between embracing the customer who has been loyal to us and turns our lights on every single day, and at the same time layering on interesting newness and excitement.”
He will continue to look at existing lines and right-sizing across all categories, and “newness” going forward will “depend on how the market is going”: “We have a very interesting sourcing structure that is able to build a brand rather rapidly and none of our competitors have that capability.
In February 2019, Debenhams announced a strategic sourcing partnership with Chinese supply chain giant Li & Fung as part of its turnaround plan.
It covers Debenhams own-brand sourcing to improve lead times and product quality, resulting in better margins.
The department store also has access to Li & Fung’s Far East sourcing network, supplier negotiating skills and product development technology.
The business now has a “much leaner team” that holds “greater ownership” over its decision making. The sourcing structure moved from one based around a domestic hub to one where buyers travel much more frequently to off-shore offices to reduce lead times.
Cook adds: “We have a lot of conversations ongoing because the marketplace is changing and we are very cautious as a business in what we look at. While things may be a shiny new [brand] for us they can be very mature in the marketplace and so you have to be very careful that what you bring in provides the profitable output that you require, is not just a nice name to put on the window.”
Another strategy is the shift to a more regional focus with its stores. This revolves around “segmented style markets” to deduce who is buying what and where, and how best to distribute stock.
“As we move from a business model where everything was assorted by volume [to one that is assorted by] customer, regionality and different buying preferences, we see a big shift,” he says. “As we’ve started testing bespoke distribution to ensure we get the right inventory to the right store at the right time, we’ve seen an amazing difference [in sales].
We’ve started testing bespoke distribution to ensure we get the right inventory to the right store at the right time
“There is so much more opportunity in these secondary markets. That’s why I say when we go back to the store list question, it’s never that simple.”
A new focus of Debenhams is to act as “town hall” for brands in smaller UK regional markets.
The role of a department store he says remains “to bring great product to the consumer that wants it at the right time in the right location. But that may no longer just be a blanket of plonking the store down that is the same anywhere you go. You need to be very smart in how you speak to a specific customer.
“The high street is changing. We’ve worked with many brands who are closing local stores and either expand their presence in or move into our stores because the cost of doing business with us is more opportune.”
Another battleground is ecommerce.
One industry CEO tells Drapers: “With any business transformation you need to not have to be in a shop to feel it. You need to have felt the change before you get inside the shop, otherwise that’s not a measure of success. In a transformation this big you have to be targeting online. I should feel Debenhams around me online and something fighting back and I don’t see any evidence of that.”
Online trade currently accounts for 21% of total sales and has been in double-digit growth year on year for the past five years, Cook tells Drapers: “We’re experiencing the same thing that all mature digital businesses are, which is how to we evolve to the next level?
“I don’t think we’re any different to what an Asos or Net-a-Porter is going through, in how do we evolve a business that has been about just putting up as much stuff as possible and driving growth in that direction? How do we fine tune that now?”
The website is the eighth largest in the UK market by revenue (as reported by Hitwise in 2019), and has undergone “significant” work to increase its [product] visibility, heighten search navigation and improve checkout. The business is “spending more time than ever” analysing its CRM and consumer data. The number of digital-only vendors is also under review.
In-store service is also being improved, says Cook: “We’ve driven growth and it’s now our time to aid in fine tuning the experience of the consumer.”
Last summer it began a six-month trial in men’s footwear in 30 stores. Newly hired and trained “Shoe Department” T-shirt-uniformed sales assistants’ presence and product knowledge contributed to a 30% sales increase. A roll-out across other fashion departments and stores is being explored.
It is this quality and level of customer experience that makes the managing director so positive about the long-term outlook of Debenhams.
He says: “This is my optimism, but I see us being the stalwart of the department store that stands for quality and customer experience. We have an incredibly loyal consumer and I think it behoves us to treat them with respect and to fine tune ourselves for their markets.”