Proof of Debenhams extorionate pricing

darc

"Indebted UK department stores group Debenhams posted an 11% rise in first-half profit.
They made pre-tax profits of £104.2m in the 26 weeks to February 28.

The firm had said in March that first-half profit would top last year's £94.1m, with higher profit margins offsetting a 3.6% drop in like-for-like sales.

Debenhams said like-for-like sales had risen 1.9% in the seven weeks to April 18, with higher profit margins than previous year. Net debt was down £66.8m to £927.2m"

So while we're all bearing the brunt of lower wages & increased taxes Denenhams are BOASTING that they have raised their profit margins. Or in simpler term - their laughing at customers with two fingers in their faces.

UK Retailers Ripping off the Republic

whippet

darc wrote: »

UK Retailers Ripping off the Republic

Where does it suggest that they are targeting ROI for a bit of ripping off ?

Lets get this straight, Debenhams are a private company in business to make money, they report good financial figures and are making a healthy profit. They have actually managed to make a better net margin.

Isn't that the aim of every single business? Fair play to them, they are managing to post good results in the light of a massive global downturn in one of the most competitive markets around.

Any consumer has the choice to buy in Debenhams or any of their multiple competitors ... how is this a rip off?

I am sick to the back teeth of hearing this mantra of Rip off Republic ..... people who are banging on about it obviously have no concept of real markets !!!!!

Jip

Another of these threads. That's the problem with recessions, everyone all of a sudden become socialists.

darc

I'm in a way involved in retail (IT side) and one company I provide some services to is an indeendent retailer in a mid sized town. About 20% of their products are also sold by debenhams in a nearby town.

The small independent retailer is on average 23% cheaper than debenhams & in one case 37% cheaper. - Total number of products surveyed is about 200, the smallest difference is 16%.

It was noticed that the price difference increased from the last survey they did in November - obviously Debenhams increased their prices whereas the independent decreased thiers due to sterling weakness

The independent retailer has standard retail margins and gets small discounts whereas I'm sure Debenhams get large discounts, so their margins must verge on the excessive - thus over charging consumers on a daily basis which in my opinion is ripping off the consumer.

Guy:Incognito

darc wrote: »

I'm in a way involved in retail (IT side) and one company I provide some services to is an indeendent retailer in a mid sized town. About 20% of their products are also sold by debenhams in a nearby town.
.

I assume you only charge the same price for your services as an equivolent guy in the UK charges?

aoibhebree

darc wrote: »

I'm in a way involved in retail (IT side) and one company I provide some services to is an indeendent retailer in a mid sized town. About 20% of their products are also sold by debenhams in a nearby town.

The small independent retailer is on average 23% cheaper than debenhams & in one case 37% cheaper. - Total number of products surveyed is about 200, the smallest difference is 16%.

Well then you can make the choice to buy from the small independent retailer, no one is stopping you!!

At the end of the day Debenham's objective is to increase profits, in order to maximise shareholder wealth. They exploit customers to do so, and are absolutely right to - such is the nature of business!

If customers are happy to keep buying their goods at higher prices, Debenhams would be stupid to reduce the prices. If customers are unwilling to pay the higher prices, the drop in sales figure should eventually lead Debenhams to lower their profit margins (and prices) in order to remain profitable. It's really not that difficult to understand.

You have to remember that at the end of the day, Debenhams main responsibility is to their shareholders - not their customers or anyone else.

whippet

darc wrote: »

The independent retailer has standard retail margins

please, please tell me what a 'standard' margin is?

Or have you just made up that term?

You are retailing IT equipment, so lets talk a few figures around 'standard margins' as you like to call them.

When I was selling standard IT equipment I would generally say desktops & notebooks add 3-5% margin, this was basing my cost versus what the obvious online sellers were charging. If I could I would have sold at a higher margin, but unfortuantly the market dictated my prices.

Right, so you buy a standard notebook for €700 + VAT. Add 5% margin, €35, that would give a selling price of €893.03 including VAT.

Now take a USB cable that your customer might want to go along with his shiny new notebook. You buy the cable for the massive price of about €1.50 + VAT. Add your 'standard margin' (your words not mine), that would be €0.08, selling for a whopping €1.58 + VAT.

Now, let me ask you, would you be selling the USB cable at €1.58 or would it be closer to the €10 mark? If so you are looking at a margin in the region of about 600%.

So where does this leave the standard margin.

As has been hashed to death here over and over again, the prices are set by what the market will allow!!!!

rubadub

aoibhebree wrote: »

If customers are happy to keep buying their goods at higher prices, Debenhams would be stupid to reduce the prices.

+1

darc wrote: »

The small independent retailer is on average 23% cheaper than debenhams & in one case 37% cheaper.

I wonder why they do not increase their prices so...

Obviously there comes a point where the increased price will lower sales to such a level where their profits drop. Maybe both stores have calculated this and really are both maximising their profits.

If I buy a cable for €1 and sell one a week for €11 I make €10 per week. If I lower the price to €2 I sell more, maybe 10 a week so I make the same €10 profit per week.

But I would be better off just leaving the price at €11, since I only have to handle 1 transaction and only spend €1 at the start of the week.

rameire

Jip wrote: »

Another of these threads. That's the problem with recessions, everyone all of a sudden become socialists.

its because there are more people on the dole got nothing to do during the day but moan.

darc

Stekelly wrote: »

I assume you only charge the same price for your services as an equivolent guy in the UK charges?

I provide a service that is IT related and some of my customers are retailers. - And yes my fees are favourable with the UK because I compete with UK companies for work.

Standard margin in the high street retail industry is about 45 - 55%. Fashion, footwear, homeware. That's margin (not mark-up) - the percentage of the selling price net of vat that is available to use to cover costs of the business.

On a wide range of items Debenhams Ireland have margins in the mid to high sixties. e.g. something that is €121.50 including VAT, (€100 net) probably costs debenhams less than €35. - A margin of 65%

Wheras in the UK, this item would sell at approx. £65 + VAT and cost debenhams £32. - A margin of 51% Higher operating costs don't justify that difference!