Deben­hams bosses miss mul­ti­mil­lion bonuses af­ter record loss

The Sunday Telegraph - Money & Business - - Business - By Ash­ley Armstrong

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.

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