Oct 25, 2018
Opening Quote: WPP sells simplification, Debenhams kitchen sinks
Now, just seven weeks in, he has announced a plan to sell a majority stake in Kantar, WPP's data investment management division, under a deal structure that will see WPP retain a stake. Although WPP has retained other profitable work with Ford, UBS analysts said the loss of Ford could flatten WPP's net sales growth next year, at a cost to earnings of between 2 and 4 per cent, as well as raising the likelihood of a big restructuring of the creative business. It has also confirmed the closure of nearly one-third of its 165 stores over the next three to five years - as reported in the Mail on Sunday and in Opening Quote on Monday - as well as the scrapping of its dividend. As the City expected? Debenhams had already warned that profits would fall to £33m in its full-year results - down from a range of £35m to £40m outlined in its June profit warning, and down from previous guidance of £50m. And Peel Hunt analysts had already cut their dividend forecasts to zero assuming that capex would be prioritised over shareholder distributions. OQ verdict: Debenhams does not sell kitchen items much larger than a kettle, but investors will be hoping new finance director Rachel Osborne has been indulging in some kitchen sinking: getting the worst of the possible news out of the way in one go.
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