- Sharp to step down next year after five years in the role
- Retailer seeks to end leadership speculation ahead of holiday
Debenhams Plc said Chief Executive Officer Michael Sharp will step down in 2016 after five years at the helm of the U.K. department-store chain, seeking to put an end to speculation over its leadership.
Sharp, who has struggled to arrest falling earnings since his appointment in September 2011, will stay for the peak Christmas season and into next year to assist with a search for his successor, the retailer said Thursday in a statement. It also reported the first increase in pre-tax profit in four years.
“I wish to stop speculation over my future becoming a distraction," Sharp said on a call with reporters. There had been “growing rumors” that investor unrest would lead to his departure, Nick Bubb, an independent retail analyst, said by e-mail.
Sharp said that while he never publicly stated his intention to serve a five-year term, it had always been his plan. Only last month, the Times newspaper reported that brokerage Cenkos Securities had approached some of Debenhams’ biggest shareholders with plan to remove Sharp, as well as Chairman Nigel Northridge. Debenhams said it will consider both internal and external candidates for the CEO role.
The stock rose 3.9 percent to 84.35 pence as of 9:05 a.m. in London.
In its final annual earnings report under Sharp, Debenhams said underlying pretax profit rose 7.3 percent to 113.5 million pounds, ahead of analysts’ estimates of 112.2 million pounds. The retailer said it has made “an encouraging start” to the new financial year.
Management is making good progress on inventory control, selling more products at full-price and managing the cost of online growth, James Collins, an analyst with Stifel, said by e-mail. Sharp’s resignation comes from a “position of strength," he said.
After years of increased discounting, Debenhams is reducing its reliance on promotional offers and held 17 fewer days of sale events last year.
Black Friday will not lead to an extra day of cut-price selling this year, as it falls within an existing five-day promotional event, Sharp said on the call, adding that by clarifying his future intentions ”we can all focus on Christmas trading."