Takeover Panel
14 October 2003

2003/23

OFFERS BY

LARAGROVE LIMITED ('LARAGROVE')

AND

BARONESS RETAIL LIMITED ('BARONESS')

FOR

DEBENHAMS PLC ('DEBENHAMS')




On 4 August, Laragrove posted an offer to Debenhams' shareholders. On 29 September, Baroness posted an offer to
Debenhams' shareholders, such offer to be implemented by way of a scheme of arrangement. Neither offer has yet been
declared final and either offer may therefore be increased or otherwise revised.

In order to provide an orderly framework for resolution of the competing offers and in accordance with Rule 32.5, the
Panel Executive has ruled, following discussions with the parties, that except with the consent of the Panel
Executive:


if either Laragrove or Baroness wishes to revise or increase its offer (other than in
accordance with the following procedure) after 5.00 p.m. on Thursday 30 October then that
bidder must lodge any increased offer with the Panel Executive by 4.00 p.m. on Friday 31
October (the 'Auction Start Date'), such increased offer to be announced at approximately 5.00
p.m. that day;


if the bidder with the lower offer at 5.00 p.m. on Thursday 30 October, or if both bidders,
announce(s) an increased offer by approximately 5.00 p.m. on the Auction Start Date then an
open auction procedure shall begin and the bidder with the lower offer following such
announcement(s) shall have until 4.00 p.m. on Saturday 1 November to lodge an increased offer
with the Panel Executive, such increased offer to be announced at approximately 5.00 p.m. that
day;


if the bidder with the lower offer after the announcement(s) at approximately 5.00 p.m. on the
Auction Start Date, or if both bidders, announce(s) an increased offer on Saturday 1 November,
the bidder which then has the lower offer outstanding shall have until 4.00 p.m. on Sunday 2
November to lodge an increased offer with the Panel Executive, such increased offer to be
announced at approximately 5.00 p.m. that day. If the bidder with the lower offer after the
announcement(s) at approximately 5.00 p.m. on Saturday 1 November, or if both bidders,
announce(s) an increased offer on Sunday 2 November, the lower bidder shall have until 4.00
p.m. on Monday 3 November to lodge an increased offer with the Panel Executive, such increased
offer to be announced at approximately 5.00 p.m. that day;


if such an increased offer is announced on Monday 3 November, then the open auction procedure
shall cease to operate. Both bidders shall be invited to submit sealed bids to the Panel
Executive by 1.00 p.m. on Tuesday 4 November specifying a fixed maximum price that each bidder
is prepared to pay. Formula offers will not be permitted. An announcement by the bidder
with the highest offer will, unless otherwise agreed by the Panel Executive, be released by
5.00 p.m. that day;


if, during the open auction, the bidder with the lower offer does not lodge an offer with the
Panel Executive by 4.00 p.m. the next day or if a party is the under-bidder in the sealed bid
process (as appropriate) then that bidder will not be able to amend its offer thereafter;


a further announcement will be made regarding the offer timetable once the above process has
been completed; and


the Panel Executive reserves the discretion to amend the above procedure as appropriate.



Each of the parties has accepted this ruling.

14 October 2003

Half Year Results.

Financial Highlights

· Group gross transaction value up 1.4%
· Group like-for-like sales up 1.4% including VAT, up 0.3% excluding VAT
· Group gross margin down 30 basis points, in line with guidance
· Profit before tax ahead of market expectations, up 1.4% at £127.1m
· Earnings per share up 4.2% to 7.4p
· Interim dividend of 1.0p per share
· Net debt reduced by £71.9m during half to £311.8m
· Long-term share buyback programme to commence with initial £20m over next 6 months

Operational Highlights

· Experienced management team in place under leadership of CEO Michael Sharp
· Investment in UK store estate: pipeline now at 14 stores up to 2017
· On target to complete 45 store modernisations in next 2 years
· Multi-channel business continues to grow strongly; online sales up 34.7%*
· Awarded Multi-Channel Retailer of the Year at Oracle Retail Week Awards 2012
· 3 new international franchise stores opened; pipeline now at 13 stores
· Solid performance by Magasin du Nord: like-for-like sales up 0.9%
· International online delivery expanded to 40 countries
· Ongoing cost, stock and capital discipline
*excluding Magasin

Not a bad set of results

Department store group Debenhams is set to give a trading update on Thursday and broker Panmure Gordon thinks the positives should include the strong womens-wear collection at the recent autumn/winter 2012 show, and something described as 'a market-leading front end multichannel proposition.' That being said, the company is going up tough comparatives from a year ago at a time when the High Street is having a rough old time of it. On top of that, Debenhams has 20 of its stores undergoing refurbishment in the second half of its financial year, which is sure to disrupt sales. The statement is set to cover trading in the 16 weeks to June 23rd, with numbers also provided for a 42-week period to the same date. "For the 16 week period to be reported next week, we think that 1.4% GTV [gross transaction value] growth and 1.3% LFL [like-for-like] sales decline are reasonable estimates," Panmure Gordon said

http://www.moneyam.com/action/news/showArticle?id=4397153

..Debenhams beats forecasts despite wet weather

By Reuters | Telegraph – 12 minutes ago
Debenhams (LSE: DEB.L - news) , Britain's second largest department store group, showed its resilience in the economic downturn by beating forecasts for quarterly underlying sales and winning market share even though it faced a deluge of rain in April.

The company, ranked second in Britain after employee-owned John Lewis, said on Thursday sales at stores open over a year rose 3.1pc, excluding VAT sales tax, in the 16 weeks to June 23, which includes its fiscal third quarter.

That compares with a rise of 0.3pc in its first half and analyst forecasts in a range of down 3pc to up 1pc.

Debenhams has benefited from a broad width of product choice , a broad church of customers, multiple routes to market and a strategy to drive profits by investing some of its gross margin, through price cuts and promotions, into pushing sales.

The firm, which trades from about 170 stores in the UK, Ireland (Xetra: A0Q8L3 - news) and Denmark, about 70 franchise stores in 25 international markets and across the Internet, said it now expected gross margin for the full year to be around 30 basis points lower than 2010-11 compared with previous guidance of broadly flat.

"Taking the sales performance, revised gross margin guidance and higher marketing spend into account, we remain comfortable with the market's current expectations for reported profit before tax for the year as a whole," it added.

Debenhams returned to the stock market at 195p in 2006 after two and a half years in private equity hands. The shares have risen 44pc over the past six months and closed at 81.4p on Wednesday

..Debenhams steps up growth plan with German website

By Jamie Dunkley | Telegraph – 35 minutes ago

High street retailer Debenhams (LSE: DEB.L - news) has stepped up its international growth plans by launching its first foreign language website in Germany.

The company, which has 164 stores in the UK and Ireland (Xetra: A0Q8L3 - news) and the Magasin du Nord chain in Denmark, said it also planned to expand its overseas delivery service to another 34 countries across the world, including Brazil, Chile (Berlin: G4R.BE - news) and South Africa, taking the overall figure to 41. Debenhams expects to expand this to 67 countries this summer.

The new German site - http://www.debenhams.de - is launched at a time when British companies are struggling to export to the continent as the eurozone debt crisis hits demand. The website is entirely in German and transacts in euros.

Debenham’s international expansion will provide customers across the world with greater access to clothes by designers including Matthew Williamson, Jasper Conran, Julien Macdonald and Henry Holland.

Simon Forster, online director at Debenhams, said: “Our mix of famous British designers and heritage products is expected to attract thousands of new customers to Debenhams.de.

“With the second largest e-commerce market in Europe (Chicago Options: ^REURUSD - news) after the UK, Germany has consistently been one of our top performing countries online and now German shoppers will benefit from their own bespoke website.”

Debenhams reported a 1.4pc rise in pre-tax profits to £127.1m during the six months to March 3. However, the retailer has warned it could be hit by the Queen’s Diamond Jubilee, the Olympics and the Euro 2012 football championships, as customers divert spending on to barbecues, beer and televisions.

Lord Green, the trade and investment minister, welcomed Debenham’s announcement. He said the UK’s online retail market, the largest in Europe, is set to grow 13pc to £77bn this year.

“The launch of Debenhams.de shows the power of British brands and their popularity with consumers the world over. It will enable German shoppers easier access to unique British design-led products, boosting our exports with Europe’s largest economy.”

..

Debenhams shares are still hovering around their 52-week peak of 96.5p, just a couple of pence down on 94.2p, after a remarkable year that has seen shares in the department store gain more than 60%.

It all fits in with the start of a recovery in the retail sector, after a downturn that took the good down with the bad -- at their low point of 50p, Debenhams shares were horribly undervalued. And now, even after such a great performance this year, forecasts still suggest a decent dividend yield of 3.2% this year and 3.6% next, from shares on a P/E of around 10.

Debenhams booms as British do up their homes homesBy Neil Craven
PUBLISHED: 21:50, 1 September 2012 | UPDATED: 11:08, 2 September 2012
Comments (0) Share

..Debenhams has expanded its ranges of homeware and furniture ahead of Christmas to cash in on Britons sprucing up their houses as they spend more time at home.

Reductions on holiday spending and dismal summer weather have encouraged the trend that has boosted sales of Debenhams furniture ranges by 55 per cent in the past six months compared with a year earlier.

The retailer has increased ranges by more than two thirds since last year to 1,700 products. It plans to begin a marketing campaign and to launch its new catalogue this weekend.


Fashionable: Analysts are tipping Debenhams shares, up 63 per cent in 2012
Debenhams will be pushing expanded lines of sofas and beds among other products.
Steve Lightfoot, Debenhams’ home trading director, said: ‘As foreign holidays become more costly, we have seen a trend for home improvement. Customers are spending time on their home and on more expensive furniture goods.’

The retailer is also hoping that the miserable summer, coupled with distinctive fashions for autumn, will make customers more likely to splash out on clothing treats.

Debenhams shares have risen 63 per cent so far this year to 95.6p and analysts say it is one of the best-placed stocks.

Debenhams: BarCap downgrades to equal weight, target lifted from 90p to 100p

.

Concern over Debenhams figures By JAMIE GRIERSON AND HOLLY WILLIAMS
Published on Sunday 16 September 2012 00:00


INVESTORS are keen for reassurance over trading conditions at department store chain Debenhams after rival Next last week warned of an “unusually quiet” August and September.


Next spooked investors with news of its summer sales slowdown, sending its shares sharply lower.

John Lewis painted a more rosy picture when it reported a 9.2 per cent rise in like-for-like sales in the six months to 28 July, 
although figures released on Friday showed a slowdown to 4.3 per cent in the week to 8 September.

With clothing and womenswear in particular having taken a hit in recent months, there may be some consequences for Debenhams.

The group, which reports fourth-quarter figures on Tuesday, has delivered robust sales growth in recent months as its recently-
appointed chief executive, Michael Sharp, leads a turnaround at the chain.

Sales rose 3.1 per cent in the 16 weeks to 23 June, against 0.3 per cent in the previous half-year.

Sharp has been focusing on improving sales growth rather than margins – a strategy that has paid off, according to analysts

Half-year profits rose by 1.4 per cent to £127.1 million and Debenhams’ share price has leapt by 87 per cent in the past 12 months.

Analysts are expecting sales to remain positive in the final quarter, although a weaker clothing market is set to ease growth slightly.

Fraser Ramzan, an analyst at Nomura, is pencilling in a 2 per cent rise in like-for-like sales growth.

Peel Hunt analyst John Stevenson noted: “By Christmas, Debenhams will have completed 32 store refurbishments, with a further 15 a year pencilled in for 2013 and 2014.”

Trading Update

Key highlights


· Strong like-for-like sales growth and progression throughout the year in challenging markets

· Modernised stores performing well

· Market share gains in womenswear and other key categories

· Online sales up 40%

· Good growth in international businesses

· Profit before tax for year expected to be ahead of last year*, in line with current market expectations

· Further debt reduction, initial £20m share buy-back completed by year end

*52 weeks to 27 August 2011 vs. 52 weeks to 1 September 2012

Debenhams & the missing guidance upgrade
By John Harrington

Tue 18 Sep 2012

DEB - Debenhams

Latest Prices
Name Price %
Debenhams 99.45p 0.00%
Marks & Spencer Group 365.20p -1.72%
Next 3,400.00p -0.03%

FTSE 100 5,868 -0.43%
FTSE 250 11,934 -1.22%
FTSE 350 3,128 -0.54%
FTSE All-Share 3,068 -0.32%
FTSEurofirst 300 1,114 -0.13%
General Retailers 1,811 -1.21%

LONDON (SHARECAST) - Life-for-like (LFL) sales growth is usually regarded as the holy grail of retailing, and department store Debenhams delivered it in spades at the end of its trading year, but the market was puzzlingly indifferent to this achievement.

Having reported year-on-year (y/y) LFL sales growth of 3.1% (excluding Value Added Tax, or VAT) in the 16 weeks to June 23rd a few months back, the group put on a spurt in the final 10 weeks of the financial year (to September 1st) to achieve LFL growth of 3.7% (excluding VAT). Peel Hunt had been expecting growth of somewhere between 1.5% and 2%.

For the year as a whole group sales were 1.6% of the previous year, which was better than the 1.3% improvement Panmure Gordon had pencilled in.

Given the pounding clothing chain Next took last week after it said sales had been disappointing in August, shareholders in Debenhams might have expected the group's summer surge to have been rewarded with a bit more market enthusiasm than it got.

Seymour Pierce said the update was a "good result in volatile market conditions." However, vis-a-vis Next, it does point out "the update may surprise some after Next reported a sales slowdown in current trading last week. However, Debenhams trading update covers a different period and does not include the first two weeks of September as Next’s comments did. These were particularly weak for the industry."

A search for other potential reasons for the lukewarm reception does not uncover many.

The gross margin for the 52 weeks to September 1st, 2012, is expected to be three-tenths of a percentage point lower than the previous year, but the group had already flagged this to the market.

Maybe bulls were hoping for a late fillip to full-year guidance figures, in which case they were disappointed; Debenhams said profit before tax for the fiscal year just ended will be in line with current market conditions, which implies a figure of somewhere between £153m and £165m. The median forecast in that range is £158.4m.

Panmure Gordon could be on to something when it suggests that a better than expected LFL sales performance would normally lead to an increase in profits guidance.

"We think that the main reason for today’s lack of profit upgrade is additional investment in systems and logistics to support the multi-channel business, since Debenhams’ roots do not lie in Home Shopping (unlike Next for example)," the broker notes, adding that the slightly higher guidance on net debt might encourage some holders to bank gains after the stock's good run.

Fiscal year-end net debt is expected to be around £15m lower than last year at around £370m. The company continues to generate cash and has, in the past, used some of this to buy back shares, but shareholders will have to wait until October 25th to learn the size of the next tranche of share repurchases.

Peel Hunt remains a fan of the stock, and has a target price of 115p. "Debenhams continues to benefit from a high level of self-help that will drive sales momentum over the year ahead. Online initiatives, including the ‘endless aisle’, which gives online customers access to store stocks and has driven significant improvements in availability, continue to lift multi-channel participation," said Peel Hunt's retail analyst, John Stevenson.

Seymour Pierce reckons the shares are no more than a "hold". The broker's retail analyst, Kate Calvert, finds plenty of reasons to believe that Debenhams will keep on growing, but it is no longer so obviously undervalued versus its peers.

"Debenhams has 30 of its 165 stores left to refurbish which will take another two years and its new store pipeline is building again, though remains dependent on the property market. Management believes there is potential for 240 stores - a theoretical £1bn sales opportunity (FY11 [fiscal 2011] sales of £2.4bn). Management has 20 stores in its five year plan of which 15 are under contract, seven have full planning permission and a couple have builders are on-site," she notes.

"The share price has rallied strongly by 25% (sector +13%) over the last three months and 67% over the last year and closed the valuation gap on its peers trading on a CY13 PE [current year price/earnings multiple] of 10x compared to M&S and Next on 10.8x and 11.7x respectively," Calvert added.

Given that level of recent out-performance, as many stock market stars have discovered, merely doing "very well" (to quote old Mr Grace, of Grace Brothers' department store) is not good enough to keep the bandwagon going.

Elsewhere on the high street, department store group Debenhams (LSE: DEB.L - news) saw like-for-like (LFL) sales rise 3.7% in the final 10 weeks of its financial year, which ran to September 1st. For the full-year, LFL sales were up 1.6%. Despite the sales figures being better than expected, the company did not increase profit guidance for the year, which may account for why the shares closed little changed.


Having read the above that LFL sales ran to sept 1 and the company did not increase
profit guidance for the year end, I wonder if they are facing the same slowdown as Next has. Next reported into two weeks of September .

Hmmmm

While other high-street retail shares have floundered, department store Debenhams shares have soared by 75% over the past 12 months to 102p -- yet they're still only on a P/E of 11, which seems fairly modest. Mind you, the shares did slide from around £1 in 2009 to a low last year of 51p, so what we've seen is a recovery -- but it's a better recovery than many others have managed.

On Thursday 25 October, the company will present us with its full-year results, and according to the recent trading statement we should be seeing "strong like-for-like sales growth", with pre-tax profit ahead of last year and in line with forecasts. Debenhams is also reducing debt and buying back shares, so we should look for further details of those when we get the figures.

Full Year Results

FINANCIAL HIGHLIGHTS

· Total sales up 2.6%1

o UK segment sales up 2.6%1
o International segment sales up 2.7%1 including franchise stores up 17.2%1

· Group like-for-like sales up 2.3% including VAT, up 1.6% excluding VAT1

· Group statutory revenue up 2.5%1

· Group online sales up 39.8%1

· Gross margin percentage down 30 basis points in line with guidance1

· Group operating profit unchanged at £175.0m1

· Group profit before tax up 4.2% to £158.3m1

· Basic earnings per share up 14.0% to 9.8p1

· Net debt improved by £15.0m to £368.7m after £20.1m share buyback2

· Final dividend up 15.0% to 2.3p; full year dividend up 10.0% to 3.3p

· Share buyback to continue with up to £40m over next 12 months
152 weeks to 1 September 2012 vs. 52 weeks to 27 August 2011
21 September 2012 vs. 3 September 2011


OPERATIONAL HIGHLIGHTS

· Continued progress against the four pillars of our strategy

o 18 UK stores modernised, on track to modernise all outstanding stores
o Expansion of UK regional footprint, 2 new stores adding 170 new jobs
o Investment in brand and product ranges to enhance customer offer
o Further international expansion, entering 2 new territories and 7 new stores

· Market share gains achieved across key product categories, especially non-clothing

· Continued innovation in multi-channel: launch of Endless Aisle, free wi-fi in all stores

· Confidence in strategic delivery leads us to raise targets for online and international operations

o Medium-term target for online sales raised from £500m to £600m
o Five year target for total franchise stores increased from 130 to 150

I've taken some profit here today.