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Debenhams trading slowed by snow


Department stores group Debenhams’ sales in the 19 weeks to January 8th 2011 were significantly affected by the snowy December weather, it has emerged.

In a trading statement released today, CEO of the retailer Rob Templeman said that group like-for-like (LFL) sales were down between 2.5 to three per cent because of big freeze that hit many parts of the UK last month.

LFL sales including VAT were up 0.3 per cent year-on-year, although when tax is removed sales were down 1.3 per cent.

Group gross transaction value, however, increased by 4.2 per cent, while it continued to make market share gains in areas such as women’s clothing, as well as improving debt and financing costs.

Danish department store operation Magasin du Nord, which Debenhams purchased at the end of 2009, has helped support the group, with LFL sales up 11.5 per cent on a Danish kroner basis.

The 19-week period also saw the company establish itself further as a multichannel retailer, with Debenhams Direct and its in-store ordering service recording sales growth of 88.5 per cent compared to the previous year.

Rob Templeman, CEO of Debenhams, said: “The performance of our business year-to-date has been pleasing, especially given the widespread disruption in December caused by bad weather.

“We have made good progress in terms of both gross margin and market share and I am particularly pleased that our market share in women’s clothing has begun to demonstrate growth.

“Looking forward, we are cautious about the robustness of consumer sentiment for the remainder of the financial year.

“Despite this, we have a clear strategy of self-help initiatives which focus on gross margin management, driving market share and growth through expansion and investment, which we believe will enable Debenhams to continue to make progress over the coming months.”

Investment specialist Investec Securities maintains its “buy” recommendation of Debenhams despite a worse-than-expected LFL performance.

A report prepared by Investec retail analysts Katharine Wynne and David Jeary said: “As expected, Magasin has helped support the overall performance and should continue to offset pressures on UK profitability from the macro environment, which is why we remain positive on the shares.”

Published on Monday 10 January by Editorial Assistant

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