Debenhams prospectus admits its website is not up to scratch

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The Independent Online

Debenhams, the department store group preparing to return to the stock market, has admitted its internet site is "under severe strain", reflecting a lack of investment by its owners.

The company's prospectus, which is being pored over by prospective investors, revealed its website "fails to cope" with demand from customers waking up to the benefits of shopping online. It has belatedly pumped £7m in to upgrade its internet site but expects the problem to persist until at least the summer.

Debenhams' management, headed by Rob Templeman, the chief executive, embarked on a roadshow of possible shareholders on Friday, travelling the length and breadth of the country. The indicative 195p to 250p price range values the stock at about £2bn, although the business will also have £1.2m in debt even after the £700m proceeds are used to trim that back.

So far the roadshow has failed to win round some of the more sceptical members of the investment community. One top fund manager said: "Maybe I'll subscribe, but only at the bottom of the range." David Liss, a fund manager at Morley Fund Management, said: "There's no sour grapes attached by institutions. You either are or are not a fan of Debenhams as a retail franchise and its prospects."

The group's prospectus also raised the possibility that it is preparing a major pensions shake-up. It said it was "actively considering possible steps to manage the group's pension-related costs". It is paying £18m into its pension schemes, which have a £7.6m deficit.

The document shows that Mr Templeman is likely to sell shares worth £9.3m, based on a price of 222.5p, in the middle of the range, and retain a stake worth £13m. Chris Woodhouse, the finance director, will pocket £10.9m, based on a middle-of-the-range listing, keeping shares worth £28m, while John Lovering, the chairman, will raise £5.7m from selling down his stake, but keep shares worth £13.4m.

Mr Templeman's annual salary will be £640,625, which he can double if he hits bonus targets, while Mr Woodhouse will receive £435,625 basic salary, which again he can double. Michael Sharp, the chief operating officer, will get £404,875, with the potential of doubling that. Mr Lovering receives an annual fee of £250,000. Last year Mr Templeman was paid £1.3m, Mr Woodhouse £901,454 and Mr Sharp £861,594.

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