The chief executive of Debenhams, the UK retailer at the centre of one of Europe’s most controversial buyouts, has reportedly expressed concerns that his company is becoming the “whipping boy” of a backlash against private equity, after seeing its share price dive yet again.
The comments by Rob Templeman, the chief executive brought in by Debenhams’ former private equity owners, were reported by the Financial Times after the retailer reported another disappointing set of results. The company’s third profit warning in a matter of months sent its share price tumbling by almost 15 percent to 148.5 pence.
Debenhams has now lost almost a quarter of its value – over £400 million – since it was refloated last year at 195 pence per share, the bottom of its proposed price range.
The company, which was one of the most successful private equity deals in history for backers CVC Capital Partners, TPG and Merrill Lynch, has since become a byword for the dangers of re-floating a private equity-backed business. Investors have suggested that its period of private equity ownership effectively stripped all the value from the company, leaving nothing on the table for the public markets.
Debenhams said like-for-like sales fell by 6.9 per cent in the last six months, even worse than their 4.5 per cent fall in the preceding six months, which would “inevitably impact on gross margins”. This caused analysts to downgrade profit forecasts once again, although the group insisted that it would look to mitigate the detrimental effect on profits in the second half of the year. The retailer blamed the “challenging” retail environment and problems with its product range for the continuing sales slump.
Templeman, who had earned a stellar reputation after delivering spectacular results for the company’s private equity owners, was seeking to defend himself against criticisms that the continued poor performance of the retailer was tarnishing that reputation.