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City betting against Debenhams ahead of Thursday’s finals

Published: 12:29 23 Oct 2017 BST

debenhams
Debenhams’ strategic review outlined in April has failed to convince the markets so far

It seems the City is betting against Debenhams PLC (LON:DEB) ahead of its full-year results on Thursday, with the department store one of the most shorted stocks in London.

New boss Sergio Bucher outlined a strategic review back in April which focuses on the customer experience, saying he wanted to ‘remove barriers to shopping’, both online and in-store.

READ: Store revamps the key for Debenhams and Carpetright, but updates prove diverse direction for the retailers

Investors obviously haven’t been too impressed and shares are down almost 15% since, even with a minor rally in recent weeks.

June’s trading update failed to inspire as well, as like-for-like sales fell 0.9% in the 15 weeks to June 17,  and Debenhams hinted that further currency volatility could leave results near the bottom end of guidance.

READ: Debenhams cautions over 'current market volatility' on the high street, as 15 week sales fall 0.9%

Short sellers have been piling into the stock for most of the year and the last update added to more of the same. Currently at least 12.8% of Debenhams shares are out on loan, with more possibly shorted as well.

Analysts at AJ Bell said: “Besides the like-for-like headline sales figure and the new structure, watch for trends on online revenues – £150 million in extra mobile investment across 2018-2020 and £50 million of exceptional cost – and trends in gross and operating margin.”

As for what analysts think, they’re looking for pre-tax profits of £96mln (2016: £106mln).

Shares were up 0.6% to 47.5p in early afternoon trade on Monday.

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