Debenhams acquisitions not off table despite reinstated dividend payments

DEBENHAMS, Britain’s number two department store group, said a plan to reinstate its dividend in 2011 did not mean acquisitions were off the table as the firm posted an expected 21% rise in full-year profit.

Debenhams acquisitions not off table despite reinstated dividend payments

The retailer, which trades from 167 stores in Britain, Ireland and Denmark, and 60 franchised outlets in 23 countries, said on Thursday it expected to resume dividend payments in April.

“Because we pay a dividend doesn’t rule out (acquisitions)...We still would have firepower if we wanted to look at other things. The free cash flow is incredibly strong,” chief executive Rob Templeman told reporters.

The company’s debt of £517 million (€582 million) was down at less than 1.8 times net debt to EBITDA (earnings before interest, tax, depreciation and amortisation), he said, adding the company was generating cash, investing £130 million in capex and would still have strong cash flow.

Last year, Debenhams purchased Danish department stores firm Magasin du Nord for £12.3 million and Templeman has said he was keen to do more deals in western Europe, with further purchases in other Nordic areas most likely.

Templeman said some shareholders were keen on a dividend payout while others wanted the firm to focus on acquisitions.

“If we can do both that would please everybody.”

Debenhams said profit before tax and one-off items rose to £151 million (€170m) in the year to August 28, in line with company guidance, and up from £125.2 million in 2008-09.

Debenhams, ranked second after employee-owned department store group John Lewis by sales, said revenue increased 9.6% to £2.56 billion, as the firm won market share in menswear and childrens wear. Sales at stores open at least a year were flat compared with the previous 12-month period, while gross profit margins were up 70 basis points as the firm moved over 530,000 square feet of trading space from concessions to its own products.

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