German group Arcandor's KarstadtQuelle department stores and British retailer Debenhams may strike a deal to merge, analysts said today.
KarstadtQuelle, on the lookout for acquisitions, confirmed yesterday it had held talks with Debenhams after a British paper reported Debenhams was seeking a merger partner in Europe.
"I see some synergies on the sourcing side," said one London-based retail analyst. "But my feeling is that you would be adding one problem to another and ending up with two problems. It does not look particularly compelling."
KarstadtQuelle operates around 90 department stores and 32 sports stores across Germany. In the past year it has restructured, and although sales rose 3.5 per cent to €4.9 billion in 2006, and core profit more than doubled, analysts say the department stores need to become more profitable.
Debenhams announced its third profit warning in four months in April. It operates about 140 stores across the United Kingdom and Ireland and 35 franchisee stores abroad.
The company, which returned to the stock market in May 2006, recorded sales of £1.7 billion in the year ended September 2nd, 2006.