Thursday newspaper share tips: Debenhams, Elementis

Debenhams was making progress with its strategy to diversify its product range and manage its stock better, but a challenging clothing market meant the company's shares should be avoided, according to The Times’ Tempus.

Tempus said the department store-operator was successfully implementing its turnaround plan, so investors should not be alarmed by the firm's 0.2% fall in like-for-like sales and decrease in expected margins, which resulted in a 6% drop in the share price.

Debenhams had also started to manage its stock better, so by the end of the financial year it should not have large amounts of summer clothing left either, according to Tempus.

In parallel, Debenhams was planning to fill 1m square feet of empty space with concessions such as Claire’s Accessories, Costa Coffee, Patisserie Valerie and Franco Manca to help it diversify away from fashion.

Hence, sales from clothing would fall further than their current level of 45% of the total.

Tempus also believed that the merits of diversification - and the risk that it might result in less focus on its clothes business - depended on whether the recent decline in fashion sales across its sector was permanent or not.

If it was then diversification would be a very good thing.

So all in all Tempus said that Debenhams was heading in the right direction, but given the difficult fashion market readers would be best advised to keep their distance for now.

Elementis's ability to meet investors's expectations for dividend payments in 2016 was intact but so too was the potential for further negative surprises, Tempus said.

The speciality chemicals producers reported positive progress across the groups, whether it be the return to growth in the Asia Pacific region or the increased signs of stability in its oilfield activities.

However, US dollar strength, especially in Eastern Europe, continued to hamstring its competitiveness in eastern Europe, especially in Russia and Kazhakstan.

Indeed, the company had already warned twice about those risks this year and Elementis was continuing to build-up its cash at a steady rate.

Nonetheless, there was "potential for further [negative] surprises", Tempus said, adding that he was concerned about the risk of further share price falls.

"Avoid", was his recommendation to readers.