Evaluation Of The Business And Financials Commerce Essay

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After completing all of my fundamental papers and the first 3 of the professional papers, I decided to submit a Research and Analysis Project for the Oxford Brookes University. As planning to enter the job market later this year, the timing was perfect for me to gain a Bachelor's Degree, enabling me to enter Graduate schemes and improving employability.

For this purpose, ACCA provided me with a list of 20 recommended topics to choose from. While going through the list, the topic which I instantly attracted to was the topic 8, " The business and financial performance of an organization over a three year period".

What attracted me about this topic was that it was all very relevant to my studies. I knew this topic would very well allow me to put the academic theory into real world scenario, allowing me to try out and learn the all important, analytical skills. Other reasoning behind my choice, was the vast amount of relevant and credible information available through the internet, helping me stick to the tight time schedule.

Choosing the Organisation

Once I chose my topic, I had to choose an organsation to base my Research on. I wanted to choose a dynamic and a Highly competitive industry to make sure my research remains challenging and interesting, and thus I chose the retail Industry. After selecting my criteria I made a list of potential companies, namely: J Sainsbury plc, Marks & Spencer, Next plc, and lastly Debenhams plc. After a brief study on them, I picked Debenhams plc as my choice for my analysis, as it best suited my criteria and it was one of the few listed companies to perform relatively good during the economic downturn.

AIMS & OBJECTIVES

The core objective of this research is to analyse Debenhams plc financial as well as Business strategy performance over the last 3 years (2009-2007). Thus the main focus can be expanded into:

To analyse the Business strategy of Debenhams plc and to assess its success in terms of profitability, growth and shareholder returns.

To analyse the financial performance of the business in the last three years.

To analyse the current strategy and financial position of Debenhams plc and its plans for the future ......................................................

Research Approach

To carry out my evaluation to answer the above stated objectives, I adopted the qualitative and quantitative approach. Qualitative analyses was done using: SWOT analysis, Porters Five Forces & ............................................

THE ORGANISATION

COMPANY PROFILE

Debenhams is a leading department store group with a strong presence in womenswear, menswear, childrenswear, health and beauty, accessories, lingerie and home. (Debenhams plc, 2009)

The business was formed in 1778 by Messrs Flint and Clark who began trading in London as a drapers' store under the name Flint & Clark. The business was incorporated as Debenhams Limited in 1905. Then, the modern Debenhams group grew from the acquisition of department stores in towns and cities throughout the UK, including Marshall & Snelgrove, Harvey Nichols, e.t.c. Most stores acquired retained their former identities until a unified corporate image was rolled out across the stores. 

In 1928, Debenhams was listed on the London Stock Exchange where it traded as an independent company and continued to expand. In 1985, the Company was acquired by the Burton group. In January 1998, Debenhams demerged from the Burton Group and became, once again, an independently listed company on the London Stock Exchange, now Debenhams plc.

(Wikimedia Foundation, 2010)

Debenhams holds a unique mix of exclusive own brands, including 'Designers at Debenhams', and third-party brands to help differentiate itself from the competitors. At the end of 2009, Debenhams plc had a total of 154 stores in the UK and republic of Ireland. Of these, 144 are department stores which offer a full selection of products and then the remaining 10 are 'Desire by Debenhams' stores, the smaller format store which offers an edited collection of womenswear, accessories, lingerie, cosmetics and childrenswear. Debenhams also has 52 international franchise stores in 17 countries and an online store, www.debenhams.com, through which much of the Debenhams range is available.

(Debenhams plc, 2009)

EXECUTIVE SUMMARY

Debenhams plc delivered good performance during the financial year ending 29 August 2009, despite 2009 being the worst period of the 'credit crunch'. Due to a successful strategy, it was able generate more profits this year than the last year, which would have been only achieved by few.

Key Performance Indicators 2009

Gross Transaction Value

↑

0.2%

Gross Margin

↑

70bps

Headline Profit before tax

↑

13.7%

Earnings per share

↑

11.1%

Trading Space

↑

3.1% (342,000 sq ft)

Reduction in net Debt

↓

£403.7m

Even though the like-for-like sales were down by 3.6%, a combination of Debenhams' strategy of own brand penetration and its focus on cash margin rather than sales growth, lead to an improvement in gross margin (by 70bps). Debenhams also gained market share during the year.

During the last quarter of the year, the largest space moves in Debenhams' history commenced, which resulted in c530,000 sq ft of trading space being converted from concession to own bought ranges. Five new stores were opened in the UK, creating a very welcome 800 new jobs, and a further 11 new international franchise stores opened up in eight countries.

The group's balance sheet was successful restructured due to a capital raising, substantially reducing net debt by £403.7m, hence reducing interest cost as well as improving the ability to refinance in the future.

(Debenhams plc, 2009)

At the turn of a decade, Debenhams' strategic priorities for 2010 and its medium term goals looks as follows:

• core stores and organic growth;

• space expansion;

• multi-channel expansion and integration; and

• balance sheet optimisation.

(Debenhams plc, 2009)

INFORMATION GATHERING

SOURCES OF DATA

Broadly speaking there are two Data collection methods that can be used for a research:

Primary Research:

This research involves collection of original first hand data for a specific purpose in mind. To do this, a research plan must be drawn up which covers data collection, data input and then the production and the analysis of the subsequent results. Due to the added complication and time required, primary research are often much more expensive than secondary research. However, because the research is original, the results gathered will be more relevant to the needs. 

Primary data can be collected using interviews, surveys, questionnaires or focus groups/consumer panels. Interviews can be either face-to-face or over the telephone. Surveys and questionnaires can be used either onsite, sent in the post or offered online. Online surveys are much more popular these days due to the ease of data collection/analysis and its cost effectiveness.

Secondary Research:

Secondary research, also known as desk research, involves using already collected, presented and analysed data to gather information for a new research. Researcher will use previous studies and findings such as reports, press articles and previous market research reports in order to come to a conclusion. The main advantage of secondary research is the relative time and money saved. However, its main disadvantages is that the data used might be out of date and it is usually collected for some other purposes, thus it requires proper screening to make sure it is reliable enough be a used as source of data.

Debenhams being a quoted company, thus it was not hard to find sources of information. Much of the information needed for analysis was readily available at its website and its published accounts. Since the nature of my project topic required analysis mainly on the past strategic and financial performance of Debenhams plc, I found secondary sources to be much more appropriate and useful for me. Therefore all of the data sources used in this project are secondary and they are as follows:

Annual Financial Statements and Reports

This was the core source of information for my research report. Like any other Annual accounts statements, information from business strategy to its financial data was obtainable from them. The latest Published accounts were obtained from the Debenhams plc website.

Internet

Substantial amount of relevant and reliable information can be gathered from the internet. So I used quite a lot of internet data in my carrying out my research. I tried to use as reliable sources as possible along with proper referencing to make sure the original author gets the credit................................ www.pressdisplay.com

Databases:

I used the database 'Business Source Elite' accessible through EBSCO to gather all the essential news, article, journals and facts to enable me better understand the business, leading to improved analysis of the Business.

Text Books

The study text published by Kaplan publishing for the ACCA studies were quite useful for providing me with the background knowledge on many aspects, such as the analytical tools used in the project.

DATA COLLECTION METHODS USED AND THEIR DESCRIPTION

Gathering reliable and creditable information is an important task in any research. As getting the input data wrong could mean that the whole analysis goes wrong. So I was very careful in choosing my source of information.

I focused on the internet as my main source of information, as I was evaluating a Public Limited Company, and thus it was possible to access large amount of data. But gathering data wasn't that easy as I first thought, it wasn't because of the difficulty of obtaining the data, but because the amount of information was overwhelming. Although more data allowed for better analysis but I had to stick to a tight time schedule and a strict word limit.

Due to time pressure and few personal commitments, I wasn't able to visit British Library to access the Mintel database, which I planned to do. So

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