Having pleased the market last Thursday with a positive H1 trading update, fashion and beauty retailer Debenhams (LON:DEBS) received a mixed reaction to its board reshuffle. While the shares traded flat, broker Shore Capital called the chnages ‘a missed opportunity’ and said it would no longer cover the stock.
Back to the future
Debenhams announced on Friday former board member Iain McDonald had been reappointed as non-exeuctive chair with immediate effect. McDonald served on the company’s board from June 2017 to February 2026 and replaces the current non-exec chair Tim Morris.
The firm also announced the appointment of Michael Stewart and Stephen Rothwell as independent non-executive directors. The changes were designed to ‘align the composition of the board with the group’s priorities for the next phase of its strategy’ and ‘rebuild equity value’.
Iain McDonald said it was ‘a very difficult decision’ to step away from the board earlier this year, and he pleased to be back. McDonald is a ‘material investor’ in Debenhams both personally and through funds managed by his business Belerion Capital.
‘A missed opportunity’
Shore Capital described the board changes as ‘a missed opportunity for a firm which has carried undoubted reputational challenge for some years’. Shore suggested the firm needed to ‘break free from the past and look to the future with better capability, an improved culture and more positive reputation’.
The broker praised Dan Finley’s tenure as CEO and the ‘very good underlying progress’ of the firm’s financial metrics. However, it argued the wider investor base would not deem the board changes to be progressive.
The ‘challenged’ reputation of boohoo/Debenhams in the past was a ‘key factor’ in the shares’ poor performance, continued Shore. ‘We remain to be convinced the new appointments will change the rancour and upheaval of times gone by’.
Following the news, the broker said it would cease coverage of Debenhams. As a result it dropped its Buy recommendation and now has No recommendation.
