Debenhams bosses miss multimillion bonuses after record loss
DEBENHAMS bosses have lost out on multimillion-pound bonuses and share awards after the struggling department store failed customer satisfaction targets and reported the biggest loss in its 124-year history.
The retailer had set a minimum target of £85m pre-tax profits to pay out the lowest bonus award of 10pc of salary, but Debenhams reported underlying profit of just £33m, and was pushed into a loss of £491.5m by writedowns of £512.4m. A fifth of the bonus payment also depended on customer satisfaction scores. Sergio Bucher, chief executive, received a £972,763 pay package last year, which included a £113,204 housing allowance that had been agreed when he joined two years ago from Amazon Fashion, according to Debenhams’ annual report.
The remuneration committee has reduced the performance share plan awards for Mr Bucher from 150pc of salary, to 100pc. The payout will be split between shareholder return, earnings performance and a return on capital employed. Debenhams’ annual report revealed the chain had conducted its own stress tests based on the “principal risks facing the business in severe but theoretical scenarios”. The chain said that the board of directors was “in agreement that Debenhams is a viable business”.
It is now in a desperate race to boost Christmas sales amid escalating fears that another dismal performance will threaten the future of the department store chain.
Debenhams has already said that it will close 50 shops in the new year but Mike Ashley, its biggest shareholder, believes a company voluntary arrangement and subsequent merger with rival House of Fraser will be needed to save the retailer. Sources close to the company have highlighted the sportswear tycoon’s track record of snapping up retailers on the cheap after they have fallen into administration.
The collapse of House of Fraser, and subsequent rescue by Mr Ashley, has made the retail market even more reliant on promotions, forcing Debenhams to slash prices even further and run longer promotions, which has put added pressure on profits. Last week, Debenhams chairman Ian Cheshire defended the retailer’s heavy discounting saying the retailer “can’t leave the market if that’s the way it plays”. In a bid to boost footfall, the retailer has offered to pay shoppers’ car parking fees if they spend £50 in store.
Concerns about high street trading were raised again last week when perennial outperformer Primark cautioned about tough trading. This year, even Black Friday’s spending has not been enough to boost retail sales. Sales at store rival John Lewis last week were 4pc lower than the year before.