Thoughts on Comprehensive Megamenus vs Negative SERPS?

So a bit of a debate I have had been listening to when it comes to some SEOs saying that its bad practice to allow your client to chuck all their links in the navigation as it'll water down Google's ability to index all categories and subcategories a website needs to rank for in SERPS?

Is this true

How do the likes of the bigger brands/sites; such as Debenhams, House of Fraser, John Lewis or B&Q?

.....get away with it OR is this just the fact their domains are such big payers that Google turns a blind eye? ;

Does the number of menu items change the SERP rankings?