Debenhams shares gain after Sports Direct director's comments on House of Fraser combination
today Sep 12, 2018
Shares in Debenhams rose as much as 9 percent on Wednesday after an outgoing director of Sports Direct said the sportswear firm's board had discussed combining the department store group with House of Fraser.
Sports Direct, controlled by founder and billionaire Mike Ashley, bought House of Fraser out of administration for 90 million pounds last month.
It also owns a 29.7 percent stake in Debenhams, which has issued three profit warnings this year.
Analysts have speculated that Ashley might want to put the two department store groups together.
After Sports Direct's annual meeting in central London, Simon Bentley, who was stepping down as the firm's senior independent director, was asked if its board had talked about the possibility of combining House of Fraser and Debenhams.
"It's been discussed," he told reporters.
But Bentley said Sports Direct was currently busy with its latest acquisition.
"If any of you had the job of handling House of Fraser right now, I think you might have your hands full, and incidentally we've also got Sports Direct," he said. "If there's opportunities in the future then we'll be in a position to take advantage of them."
Bentley later issued a statement to clarify his remarks.
"I made no mention of any merger between House of Fraser and Debenhams, nor did I intend my answer to infer that," he said.
Shares in Debenhams, down 63 percent so far this year, were up 5.3 percent at 1445 GMT.
Earlier this week Debenhams rushed out a trading statement and denied it was actively planning major store closures.
Ahead of the investor meeting Sports Direct announced that Bentley was retiring as a director of the company, having served on the board since 2007, and would not seek re-election.
Sports Direct also said its under-fire chairman Keith Hellawell was stepping down after nine years in the role.
Ahead of the meeting three shareholder advisory groups - Pensions & Investment Research Consultants, Institutional Shareholder Services and Glass Lewis & Co - had urged investors to vote against the re-election of Ashley and Hellawell, over Sports Direct's alleged poor corporate governance and continuing concerns about employment practices.
Hellawell, a 76-year-old former police chief constable, has previously battled to keep his job at the retailer in the face of criticism of its working practices and his own ability to control Ashley.
He narrowly won re-election a year ago after independent shareholders defeated him in two previous votes when Ashley used his 61 percent holding to ensure his survival.
He will be succeeded as chairman by non-executive director David Daly, a former Nike executive.
The re-election of Ashley, who unexpectedly attended the meeting, was opposed by 9.78 percent of votes cast. Ashley did not speak.
The meeting, attended by about 30 shareholders, lasted about 10 minutes with no questions asked by investors.
Sports Direct said earlier on Wednesday its trading was in line with previous guidance. It has forecast a 5-15 percent improvement in core earnings for the current financial year.
Shares in the firm were up 3.6 percent.
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