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Debenhams 'in final stages' of appointing new chief executive

Published 14/04/2016

Michael Sharp plans to remain at the helm until his successor is appointed (Debenhams/PA)
Michael Sharp plans to remain at the helm until his successor is appointed (Debenhams/PA)

Department store chain Debenhams has said it is "in the final stages" of appointing a new chief executive as boss Michael Sharp confirmed his resignation on unveiling a rise in half-year profits.

Mr Sharp, who announced plans in October to leave this year, said he has now handed in his resignation, but still plans to remain at the helm until his successor is appointed.

The group said the appointment process was "well advanced" and r ecently hired chairman Sir Ian Cheshire added that an announcement is expected in the next few weeks.

Confirmation of Mr Sharp's resignation comes alongside a solid set of half-year results, with a 5.5% rise in group pre-tax profits to £93.8 million for the six months to February 27.

But group like-for-like sales growth slowed to 1.1%, down from 1.9% over the Christmas season.

Its 165 UK stores saw sales rise 2.9%, offsetting a 3.7% fall at the international arm as it was hit by currency exchange rates.

In his last set of results before bowing out, Mr Sharp said the chain put in a "strong" half-year performance, shrugging off the recent gloom from rivals such as Next and Marks & Spencer.

Next sent shockwaves through the clothing sector last month when it warned the year ahead was set to be the "toughest we have faced since 2008" as it cautioned over profits, while Marks & Spencer last week posted another hefty sales fall in its clothing division, down 2.7%.

Mr Sharp said: "Although there is plenty more to do, we are on track to deliver full year results in line with market expectations.

"When I leave the business later this year I am confident that it will be in a good position to deliver continued sustainable growth under a strong and capable management team."

Shares in the group rose more than 3% after the half-year results.

Sir Ian - the former chief executive of B&Q parent Kingfisher, who formally succeeded Nigel Northridge as chairman last week - said he had been helping with the search for a successor to Mr Sharp since mid-January.

It is thought that those in the running include Mothercare boss Mark Newton-Jones, who has been with the baby and maternity wear chain for two years, as well as Mike Shearwood, the former head of the Karen Millen womenswear chain, and Stuart Machin, managing director of Australian retailer Target.

But Mr Machin is understood to have withdrawn amid a supplier income investigation at Target.

The internal candidate for the job is said to be Debenhams trading director Suzanne Harlow.

The departures of Mr Sharp and Mr Northridge come after reports earlier this year suggested some of the group's major investors were unhappy with its share price performance and were seeking a board shake-up after disappointing results in previous years.

But Debenhams insisted its strategy was paying off, with plans to cut down on its promotions seeing full-price sales rise 5.1% and online sales surging by 10%.

The group added a note of caution over the referendum, saying it "may increase both economic and political uncertainty, and create the possibility of a disruptive exit from the EU".

It said: "Debenhams will continue to monitor the situation."

The group also said it would also put on hold UK store openings until the 2018 financial year.

Analysts praised the better-than-expected results, but some added a note of caution.

Russ Mould, investment director at stockbroker and pensions provider AJ Bell, said the incoming boss of Debenhams will " have a big job on his or her hands if they are to return the firm to past profit glories and fully repair the damage done to margins by a reliance on blue-cross sales days".

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