It amazes me how some companies get into a mess over the most basic flaws in their business model. Common sense should have prevailed in the board room and ensured that problems are fixed straight away.

Too many companies limp along until they reach crisis point and a ‘turnaround’ expert is parachuted in. With that in mind, you might want to look at retailer Debenhams (DEB) and leisure operator Goals Soccer Centres (GOAL:AIM) as both are topical examples of ‘recovery’ stocks.

LOST THE PLOT

Debenhams’ revival plan (20 Apr) looks weak. It failed to include sales or profit targets and the company still can’t seem to grasp the basics of retailing: being the first place that comes to mind when you want to buy a particular product.

The new strategy is full of naff ideas, in my opinion. For example, the use of phrases such as ‘mobile @everywhere’ is bizarre; it screams of the days when everyone added .com to their corporate name to appear as if they were leading the internet revolution.

The ‘mobile @everywhere’ tag line is Debenhams’ attempt to capitalise on customers having mobile phones on them at all times.

It also uses the phrase ‘Meet me @Debenhams’, saying it wants its stores to be somewhere where ‘customers can spend time with family and friends’. Surely that’s a leisure centre or a shopping mall, not a department store?

I taught my daughter to tread water in the deep end of the swimming pool last weekend. I should have asked Debenhams for some tips, as it must be a master at trying to keep its head above water without sinking.

PROBLEMS STARING YOU IN THE FACE

A previous visit to a Goals Soccer Centres five-a-side football site struck me how the place was a mess, lacked customers and badly needed refurbishment.

Making the place more appealing seemed like such an obvious way to fix the business – yet it took several years before Goals took a hard look at why it was struggling and decided to take corrective action.

Its latest results showed a return to like-for-like sales growth, following a multi-million pound refurbishment and modernisation programme. The business appears to have stabilised, but where does it go from here?

Chief executive Mark Jones told me in March that growth would be driven by the US. ‘The UK is just about refurbishment and sweating the assets.’

FAILURE TO UNDERSTAND LOCAL MARKET

Interestingly, he said the company’s first US site ran into cash flow difficulties. One problem was failure to understand cultural differences between the US and UK.

Goals replicated the UK design overseas including a big room for children’s parties. It discovered California’s sunny weather meant no one wanted to be stuck inside, plus a culture of the whole extended family turning up for parties.

It couldn’t capitalise on the revenue opportunity because it lacked a large enough outdoor area for parties. That mistake could have easily been avoided with basic research.

There is now another twist to the story as Goals is sounding out a possible merger with UK rival Powerleague. This seems like a defensive move, ensuring there isn’t a major competitive threat in the UK while it concentrates on the US.

I’d imagine the deal would cause all kinds of fuss among the competition authorities as the two companies control about 60% of the market.

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