EU Financial Roundup: Debenhams Closes Stores, Burberry Sales Fizzle in US, Zalando Momentum Continues

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In Europe, retailers’ positions are just as unfavorable as in the U.S. Except for the e-commerce players, that is.

Debenhams

As it focuses more on its digital strategy, Debenhams said it will start consultation to close 10 stores and a warehouse over the next five years in an effort to simplify and improve efficiency. For the rest of its stores, the company will reduce product on the floor by 10 percent to declutter. Debenhams also plans to exit some of its brands and non-core international markets.

For the 26 weeks ended March 4, EBITDA was down 2.5 percent to 149.1 million pounds ($191 million). Mobile orders, on the other hand, drove online performance up 64 percent.

As part of its new strategy, called Debenhams Redesigned, the company plans to deliver growth by becoming a “destination” and drive efficiency by focusing its business.

“We will be a destination for “Social Shopping” with mobile the unifying platform for interacting with our customers,” Debenhams chief executive Sergio Bucher said. “If we deliver differentiated and distinctive brands, services and experiences both online and in stores, our customers will visit us more frequently and, having simplified our operations to make us more efficient, we will be able to serve them better and make better use of our resources.”

Burberry

Burberry isn’t doing too well in the U.S. right now.

The British luxury brand reported comparable sales for the six months ended March 31 up 3 percent, driven by growth in Asia. In the Americas, on the other hand, sales were down in the mid-single digits.

“The relative strength of the U.S. dollar drove a strong increase in sales from U.S. customers abroad, while demand at home reduced (both domestic and tourist),” Burberry said in a statement. “In addition, strategic actions taken to protect brand positioning in the highly promotional U.S. environment, contributed to the decline.”

Total revenue for Burberry was down 1 percent to 1.61 billion pounds ($2.06 billion). Mobile traffic for the brand was strong, showing 50 percent year on year growth, helped by an enhanced website in China that doubled its direct to consumer sales.

“In what remains a rapidly changing environment, Burberry will continue to take actions to elevate and strengthen its brand positioning, maintain tight discipline on costs and execute on its strategic agenda, including the transition of its beauty business to a license agreement,” the company noted.

Zalando

Zalando had more positive results in its first quarter.

The Berlin-based e-commerce company reported revenues up between 22 percent and 24 percent to 971-987 million euro ($1.04 billion – $1.06 billion) for the period, according to preliminary figures.

Zalando expects earnings before interest and tax of between 10 million and 30 million euro ($10.72 million – $32.16 million) for the quarter, and guidance for the full year points to revenue growth between 20 percent and 25 percent.

“We continue to successfully execute towards our goals and started 2017 with strong growth momentum,” Zalando CEO Rubin Ritter said. “We are fully on track with our long-term aspirations and keep expanding our business at high speed, while investing into our consumer experience and brand partner position.”

The company’s full financial disclosure will be out on May 9.


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