Debenhams CFO carries can for poor performance

Simon Herrick, the chief financial officer (CFO) at Debenhams, has stepped down just two days after the department store chain issued a post-Christmas profit warning.

Herrick, who receives a basic annual salary of £410,000, had been under pressure after he asked suppliers for a discount on goods eight days before Christmas.

In a letter he sent to suppliers, he wrote: “As we will mutually benefit from the growth of Debenhams we are now seeking a contribution from our suppliers to support our commitment to on-going investment.”

An additional discount of 2.5% applied to all open orders on our system at close on December 17…This is a contribution and not a permanent amendment to your trading terms with Debenhams,” the letter said.

Earlier this week and after it was clear that the last minute Christmas shopping surge had failed to materialise, Debenhams lowered its profit outlook.

The retailer revealed an £85m profit for the 17 weeks to December 28 - way off the £114.7m in the same period last year.

It blamed the poor performance on...

Continued...

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Comments

"The Roman Fool"

mikefleming3028 | | Permalink

Any chance of Lin Homer and fellow Board members doing the decent thing and  taking a leaf out of Simon Herrick`s book? In every other business poor performance = the boot, not so in HMRC I think?      

"Mutual Benefit" my posterior

redboam | | Permalink

Someone of my acquaintance whose company is a supplier to Debenhams asked my advice on this letter seeking an extraordinary and unwarranted last minute discount and I suggested that he should respond with a flat no. In my experience such demands, especially when accompanied by terms such as "mutual benefit" are a clear sign that the sender is on its way to the exit

So glad I don't supply to retailers

tom123 | | Permalink

I'm glad we don't supply to retailers.

A friend used to supply Argos - and, whenever they tried to collect on the sales ledger account, and sort out all the unilateral debit notes - there was a constant unspoken 'do you want to be in the next catalogue' phrase in the air.

I also remember the indignation of the Focus DIY md, on the radio, that people had dared suggest his firm was anything other than rock solid - shortly before it went pop.

- Not suggesting that of Debenhams though..

 

In the case of Debenhams, interesting that the CFO, and not CEO takes the wrap.

EDIT - is it 'Rap' - not sure.

Retailers

B Roberts | | Permalink

tom123 wrote:

 

A friend used to supply Argos - and, whenever they tried to collect on the sales ledger account, and sort out all the unilateral debit notes - there was a constant unspoken 'do you want to be in the next catalogue' phrase in the air.

 

Indeed.

I also understand that goods sold to such suppliers are effectively sold as "sale or return" - so, if the retailer doesn't sell the goods they return them to the supplier (and you can imagine the nightmare in tracking product codes, batches, asking for credit notes, making part payments etc. etc. and you will soon not know whether you are coming or going - yet you will undoubtedly be worse off than the customer as any errors will invariably be in their favour !).

I understand the response from redboam, however in reality such a response would be seen as being "unsupportive of the relationship" and you would find that in future you would not be a regular on their approved supplier list.

"Unsupportive"

redboam | | Permalink

If a supplier's merchandise is performing well, no retailer would wish to be without it. The danger associated with a line that people come into the store to buy being absent or worse still an empty shelf is too damaging. I have one client who has a policy pro-forma of reducing credit ceilings or pro-forma only in respect of trade customers dealing on a credit basis whose conduct, when it comes to paying their bills in full and on time becomes suspect and they have avoided significant bad debt losses as a result. When a trade customer is experiencing difficulties as an undercapitalised Debenhams appears to be, being taken off the approved supplier list is could well be a good thing in the long run.