#43 Debenhams Group CEO: Our Fightback Against China's Fast Fashion

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0:50Hello and welcome to our latest Big Boss interview today. It's Will Bain, and he has been speaking to the boss of a business that dominated our high street, the name of it did at least, for many, many, many years. But now it's got a bit of a different form.

1:07Dan Finley:Will, who have you got for us today? We've been speaking to Dan Finlay, the man who came in basically a day after the Debenhams group came out of administration and had the rather daunting task of trying to turn around what had been a real stalwart of the high street, hadn't it? The group now, though, perhaps is better known for some of those challenger brands like Boohoo and Pretty Little Thing, for example. So kind of fast fashion aimed at perhaps those younger shoppers. So we asked him a little bit about hanging that group together and how you make all those brands mould together. A bit like some of our other retailers that we've spoken to, Dan Finley, very concerned about these loopholes that Chinese companies like Shein and Timu have been using to sell into the UK, saying it sets an unfair advantage for our retailers.

1:51Dan Finley:And we also talked to him, a big corporate story. It's been a back and forth, or actually just a fourth, in a lot of the financial news pages where their rivals at Fraser's Group, Mike Ashley's company, of course, have been very critical of Mr Finley, his potential payout, what he's doing with the company, what he's calling the company. Mike Ashley and Fraser's Group, their biggest shareholder with almost 30%. So we got into a bit of how you deal with that as well. But mostly we talked about how you turn a legacy retailer, if you like, into a modern online department store, as he put it. And he said that the genesis of the idea all came from his mum, who was a big Debenhams fan.

2:30Dan Finley:So here's our chat with Dan Finlay, the boss of Debenhams Group.

2:40Dan Finley:Dan Finlay, thanks so much for joining us on the Big Boss Interview Podcast. Great to be here. Thank you very much for having me. We're really excited to have you. We've got a lot to chat about, I think, today. Take us right back, first of all, then. What is it like walking in as a leader into a company that's literally, that day, basically just come out of administration? We see such a huge opportunity and saw such a huge opportunity with Debenhams. It's got acclaimed to be one of the oldest retailers in the world, founded in 1778, almost 250 years old now. An icon of British retail, a storewart of the British high street, the creator of the department store concept.

3:22The first retailer anywhere in the world to put two different brands together under the same roof, created the British high street. a brand with so much history and heritage. And what we had is a vision and a determination to save Debenhams, to bring Debenhams back, to make sure that we could be the guardian and custodian of this brand for many years to come and that it could continue to play a small part in people's lives as it had done for hundreds and hundreds of years before that.

3:51Dan Finley:How does it not feel overwhelming in that moment? There must have been so many things that presumably almost needed to be done simultaneously and yet were impossible to do simultaneously. There was, and in many respects, the challenges that Debenhams went through gave it the opportunity to start again. It gave it the opportunity for a fresh start. It allowed us to reimagine what Debenhams was going to be. It allowed us to overcome some of the challenges that it has had historically. And we came with a huge amount of enthusiasm, passion and vision for recreating and reimagining Debenhams and the new Debenhams to be Britain's online department store.

4:28Dan Finley:And what was it that made you personally want to go there? Because you were having a pretty good retail career for a big company already. You'd been at JD and others, you know, people who were really thriving in the sector. Why did you want to go to, I guess, a slightly battered asset? So interesting story there. When I look back on my time at JD, which was an incredible journey and, you know, been so successful there, and we had a really great decade during my tenure there, what I'd really enjoyed was climbing the mountain rather than being at the top of the mountain when I look back on the 10 years at JD you know the first five years were the best five years when we were a challenger brand when you know we weren't this you know regarded as one of the best retailers in the world it was you know we were hustling hard we were the challenger brand we were competing hard we were trying to make our name we're trying to get ourselves on top we're trying to beat the competition and that's what I loved and that's where we really thrived and Those were some of the best days that we'd had.

5:25So I was always thinking, what did I want to do in the future? And I wanted to go back down to the bottom of the mountain. I wanted that challenge again. And so that excited me. Debenhams is an interesting story. And actually, I wasn't sure that I wanted a big challenge on my hands like that. And interestingly, I was in the car driving my mum to an appointment. And I never answer phone calls that come through in the car on unknown numbers. But I answered it because I thought it might be related to my mum's appointment. And they said, oh, Debenhams, really big opportunity. We think you can do amazing things with it.

5:58And we really want you to get involved and, you know, turn this around and resurrect it. And put the phone down. No, sorry, now it's not a good time. I've told you I'm not interested. And my mum was like, Debenhams, I love Debenhams. Debenhams is my favourite shop. You know, and I remember all, you know, growing up, we'd go around Debenhams on a Saturday afternoon. We'd go to the cafe whenever we had any big family moments or occasions. We would go to Debenhams when I had my first interview at Oxford University. You know, I went to Debenhams and bought an Advent Purple Jeff Banks shirt and tie number, which probably wasn't my fashion highlight, but did the job.

6:37And over the course of the next three or four days, I was literally inundated with hundreds of messages from friends and family as my mum would sort of create this campaign to lobby me to, you know, bring Debenhams back. and restore it back to its best. And I sort of began to listen more. People gave me lots of ideas about what it could be. I went to the British Library. It features in quite a lot of books, a history and a heritage. I was really excited about this icon of British retail and the opportunity to bring it back and reimagine it and preserve it for the future. So that convinced me that this was a challenge worth taking on.

7:14And I was so excited by the opportunity. and so intrigued by the history that it had. I felt there was a really strong story to tell there and I was excited to lead it in its next chapter and take on the guardianship of this iconic British retailer. I'm interested that you saw it that way

7:31Dan Finley:because I think for a lot of people, wouldn't the alarm bells be that unfortunately, lovely though it is that Mum was very supportive and believed you were the right man for the job, that they kind of associated Debenhams with Mums at bygone time and going shopping on a Saturday for purple shirts. Yeah, they did, but I think that was an advantage and we've used that as an advantage. Debenhams has pretty much 100 % brand recognition in the UK because everybody knows it. Everywhere I go and tell people that I'm with Debenhams, people are rooting for Debenhams and I think everybody's got a story to tell about it.

8:04Whether it was me buying my shirt and tie for my interview at Oxford, my mum buying the dress that she wore at the christening of her first grandchild, everybody's got a story to tell about it. So that was a huge advantage. And the challenge for Debenhams of old wasn't that it wasn't popular. It wasn't that tens of millions of people wasn't shopping with it every single week and that people didn't love, you know, the brands and the products that they sold. Because it was a really accessible department store where people felt comfortable. Whatever they wanted to buy, whatever occasion it was for, whether it was for Christmas and gifts for all the family, you could go and get all of that.

8:37It was that the business model was broken. There was no shortage of consumer demand. There was no shortage of popularity amongst the British population. the business model was broken so therein lied the opportunity for us we had a brand that had so much love and affection and so much demand from consumers we just had to change the business

8:54Dan Finley:model is that why the name then because that's been a bit of a battle hasn't it because you've got all these for people who don't know got all these great brands boohoo debonahms themselves boohoo man pretty little thing caramillan coast warehouse oasis nasty girl all under the umbrella now with the Debenhams group. Perhaps Boohoo probably, to our younger listeners as well, would be the most famous of those. And you had this ding-dong, didn't you, about whether it was going to be called Boohoo or Debenhams. Why did you come down on the kind of legacy brand rather than the challenger one, I suppose?

9:23Well, what we felt is, first of all, I'd take on the role of Debenhams as a brand, and I was turning around Debenhams. We'd bought it out of administration, repositioned it as Britain's online department store, fixed the business model, fixed the business model by going online only and being digital. fix the business model by going marketplace, you know, rather than the traditional stocked and wholesale model. And that really transformed the business for us. And that allowed us to develop a business that was growing rapidly, that had tens of thousands of brands and partners in the community, millions of consumers.

9:57And so that blueprint that we'd used to turn around Debenham so successfully from nothing to 654 million last year, very profitable, generating cash, growing rapidly, resonating with consumers. I looked at that as a blueprint that was applicable to the turnaround of our wider group. And when I took on the role in November 2024 as a group chief executive, my strategy was very much based on the blueprint of what we'd done with Debenhams, modernising retailers, evolving them and changing the business model so that they had a future ahead of them that delivered sustainable and profitable growth. And so I really wanted to signal to the broader stakeholder community that this great success that we'd had in Debenhams, rescuing it out of administration, everybody told me or many people told me it couldn't be done.

10:50People said, Debenhams, it's where my nan shopped. Consumers today aren't going to shop there. It's done. It's in the past. But I saw enough in that brand that by changing the business model and reengaging it with consumers, it was amazing. And one of the things that we did is we actually put young fashion brands like Pretty Little Thing, like Nasty Gal, like Boohoo on Debenhams. And what that did is that really stretched the age demographic of it. Suddenly 18, 20, 25-year-olds were coming to shop young fashionable product with us. You can sort of ride that volatility in any one of those little bits.

11:22Yeah, along with the older consumer that was maybe shopping Dorothy Perkins or Wallace, for example, and everything in between. So Debenhams was this really broad church, 16 really to 75 plus, an accessible department store for everybody. So I wanted to reposition the group, change the strategy of the group, rebrand the group. And we went forward as Debenhams group because that was reflective of the opportunity ahead. We've done a huge turnaround with Debenhams. We had a big turnaround to do in the wider group. and I wanted to signal to people where we were going, that Debenhams was now the epicentre of our business.

12:00It was a jewel in the crown now and that the blueprint we'd use to turn around Debenhams was going to be what we used for the wider group and those proof points that we demonstrated in Debenhams should give people confidence that we'd deliver the turnaround for the wider group.

12:13Dan Finley:In the same way you would do with a sort of old-fashioned department store, come under this umbrella, this game, and you'll find everything you're looking for, that kind of idea but for the digital world. Yeah, absolutely. So, you know, the 10 plus brands that we own and operate ourselves, but complementing that with today, 25 ,000 other brands and partners. And my vision for Debenhams is I want Debenhams to be to retail, what Spotify is to music. I want it to be that destination of choice for consumers where you go there and whatever song you want to listen to, so to speak, you know, your son comes back from school today and he says, you know, I've heard this in the playground.

12:48You can go on to Spotify and find it. but it does it in a curated and personalized way you know with absolute certainty whatever you want to listen to you can find it there but it doesn't um make inappropriate recommendations and overwhelm you with songs and albums that you don't want to listen to it's very personalized curated and that's what i want to do with debonance on one journey there we're not there yet but across fashion home and beauty i want that to be the destination of choice for consumers i'm sort of turning retail a little bit on its head there and that I'm trying to democratize choice for consumers as well because what I recognize in the Debenhams you know business of old is that if you wanted to go into the store it was constrained by the amount of physical space that it had so the buying director might be choosing a hundred dresses out of the many thousands or millions that were in existence and only a hundred dresses were shown to consumers Now, I want to gather up around the world a huge selection of brands and partners and dresses that we manufacture ourselves, for example, as well.

13:51Give the consumers a choice. I guess back to your point about putting brands together in the department store. That's what Debenhams did in 1778, 248 years ago. Nobody else has had that vision. William Debenham, for example, had had that vision. And he did it first, you know, just around the corner from Oxford Street. And then sort of 245 years later, you know, we had this vision to do it again. But in the modern world and recreating a business that was fit for that new generation and was addressing the younger consumer as much as that older consumer.

14:25Dan Finley:And we'll rejoin that journey with those brands in a moment as well. But the name itself, I said with a slight smile, there's been some knockabout of the name. been some knockabout with one of your biggest shareholders, right? And lots of our listeners will know exactly who that is. That's Mike Ashley and his Razor's group there and just shy of 30 % of the business. How easy is it to have someone who is essentially a competitor, right, be also your biggest shareholder? Yeah, look, I'm Razor-focused, laser-focused on turning around our group, having turned around so successfully Debenhams, and delivering that turnaround for the benefit of all of our shareholders.

15:03That's what I want to do. I'm focused on creating that shareholder value for all of our shareholders, of which Mike is a very significant shareholder. Of course, Fraser's are a competitor to ours, and Debenhams and Fraser's have been competing for hundreds of years, you know, on high streets up and down the country and online up and down the country. What I really focus is on the things that I can control, which is making our business better and driving that forward. We go forward as Debenhams Group. We operate to all intents and purposes as Debenhams Group. Everything that you read and experience with us will be as Debenhams Group.

15:38It's just the formal change to the name that's listed at Companies House that's still to be done, which required a special resolution that didn't pass. Because they wanted it to stay boohoo just so people who are becoming new to the story. Don't know why that was, but they made that decision. but on a day-to-day basis it makes no impact to us. We go forward as Debenhams Group. Our symbol on the stock market is Debs and people experience us today as Debenhams Group.

16:06Dan Finley:What about the commentary I suppose that they have? I mean both he and his son-in-law who runs the business talking about everything from your pay to your share price. What do you make of that? Look, I'm very focused on turning our business around and generating value for all of our shareholders. I came into the business in November 2024 after a significant period of three, four years of major challenges for the group. I joined the group originally to turn Debenhams around. It's a great British success story in Debenhams. We've saved and rescued an icon of British retail. I stepped in to that opportunity in November 24 among significant challenges and a group facing significant challenges.

16:52and a group that will go on to lose£350 million in the year to February 2025. But my focus and my determination and my belief is in turning that group around and making the business better. Delighted that we announced just last week that the company was back to growth in Q1, that profitability has materially improved as we upgraded twice last year. And I'm excited by the opportunities ahead. It's a multi-year turnaround. round we're making good progress there's still work to be done but i want to uh deliver value

17:27Dan Finley:for for all of our presumably it becomes a little bit like trying to rate in mario kart when people are chucking shells and banana skins out you're right when michael murray who who runs the shop over there at phrases is saying it's a corporate disgrace uh the money that you might get if you take the share price up to up to three pounds you've got them saying it'd be like man united winning the league it's totally unrealistic i mean that is not necessarily supportive from your biggest share do manchester united just finished third in the league and they're on the up aren't they although i'm a liverpool fan it pains me to say that look um the company really wants to incentivize me to deliver huge growth in the share price for the benefit of all shareholders if I increase the share price by 18 times and hold that price there for two years.

18:17Because that's what we're talking about, basically, aren't we?

18:19Dan Finley:It's, what, 23p today, something around that, so getting up to£3. So in that sense, they are saying it's a challenge, perhaps a bigger one than Michael Carrick's got in his hands. It's a big challenge. It's a big opportunity. And if I, at the time that we announced it, if I 18x the share price and take it to£3, then the shareholders will be the biggest beneficiary of it. It'll be generating over£4 billion of value for shareholders. Me and my management team will be rewarded for that too. Do you ever speak to him though and say, come on, just leave us alone for five minutes, will you? We're just trying to get on with this.

18:52Look, I'm just focused on what I can do, which is improve the business every single day, making us a better business, strengthening the performance, knowing that that is in the interest of all of our shareholders, of which he's a major one.

19:06Dan Finley:An area where I think you guys probably are in alignment, yourselves and the leadership team at Fraser's, is around this de minimis legislation, isn't it? So for people, again, who can't quite remember where the terminology is linked to, this is about small parcels coming in that don't face any tax if they're under a certain value in products. And it's been kind of utilised really by the big Chinese online retailers in particular, hasn't it? Government said it will close it by 2029. Fraser's are furious about that, so why not now? Is that a view you share? Yeah, 100%. And, you know, when we supported the efforts of the British Retail Consortium recently in writing to the government and lobbying, we operate in a, you know, global economic environment.

19:48You know, business is globally competitive these days. And we want as much as possible for there to be a level playing field for British companies to compete, you know, fairly against major global competitors. Of course it's had an impact. Of course it's had an impact. And you look at the rise of Sheen and Timu and other operators in the UK. It has a massive impact. And you see what happens in the US and the impact on...

20:11Dan Finley:In as much as you will see sales go there, because you're in such a price-sensitive bit of the market, right, that if they don't have to pay what you have to pay there to bring the parcels in or whatever... It gives them a structural advantage, you know, and a structural cost advantage that is hard to compete with. And it's a government that's creating that disparity. Great that there's recognition in the government that it needs to change. Great that there's commitment in the government to change it. That's absolutely what we've asked for when we're completely supportive of that. changing policy my ask is that let's do it quicker than 2029 you know the u.s rolled it out in six months the eu were rolling it out um from july onwards in in different countries so let's not take three years to do it let's do it in 12 months like others have managed to do that's my ask and otherwise what kind of pressure does it put on i'm going to call you a high street retailer as a kind of catch what what kind of pressure does it put on our retailers british retailers yeah look british retailers that are you know supporting british jobs that are driving british jobs that are paying taxes in the uk that are trying to do the best for you know the uk consumer are disadvantaged in a global competition whereby um there isn't that level playing field they have a structural cost advantage they're not um governed by the same rules and legislation around the safety of products for example um you know it's a big loophole that needs to close great that the government's recognizing and it needs to close, let's just close it quicker.

21:37Dan Finley:You mentioned those retailers as well. Shein kind of, I guess, would it be fair to say kind of brought fast fashion back again a bit when perhaps the model was under pressure here in the UK from some of the traditional players, and this predates you with the company, but the likes of Boohoo and Pretty Little Thing, for example, have been under pressure from the emergence of Shein in there. Is fast fashion back again, do you think, full stop? Is it kind of cool again for that younger shop who likes that? Look, I think fast fashion means different things to different people. I think if you look at Boohoo, Boohoo was the original online fashion disruptor.

22:13And what it did is it took fantastic product that people were seeing, that celebrities were wearing, that they were seeing on TV. and it delivered it to consumers quickly, within a couple of weeks of it being seen, cost effectively and delivered it rapidly the next day to consumers. And so Boohoo, you know, part of our group, was that original online fashion disruptor and had tremendous success and Pretty Little Thing followed that. Again, part of our group becoming this global fashion phenomenon through its major partnerships with Kylie Jenner and Hayley Baldwin, as she was at the time. And it sort of fused this great fashion at great prices as worn on celebrities and created this influence of marketing, so to speak.