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Debenhams sales flat but profits forecast good


Department store group Debenhams today reported a year-on-year like-for-like sales drop excluding VAT of 0.4 per cent for the 52 weeks to August 27th 2011, although the company expects its annual profits to be ahead of current market expectations.

In a trading update released this morning the high street retailer said that sales in the last eight weeks of the financial year were particularly satisfying, rising 0.4 per cent compared to the same period in 2010, with its multichannel arm driving growth.

Online, in-store ordering and mobile sales increased by 71.9 per cent over the course of the year, with Debenhams launching more of its ranges on its website over period, while gross transaction value for all areas of the business was up 2.9 per cent.

Today’s statement indicates that the retailer continued to focus on the maximisation of cash margin by balancing retail selling prices and optimum demand – a policy that means the group’s gross margin rate for the year will be flat or slightly down year-on-year.

Year-end net debt is expected to have fallen £130 million to £385 million, while Kantar Worldpanel Fashion and NPD Group data shows the business has increased its share of the clothing and health & beauty markets respectively.

Michael Sharp, who started his tenure as CEO of Debenhams earlier this month following the retirement of Rob Templeman, was positive about the results.

“Debenhams delivered a stronger performance in the final period of the year, delivering like-for-like sales growth in the last two months against tougher prior year comparators,” he explained.

“We believe our decision to maximise cash profit by investing in top line growth has proven successful and this will result in headline profit before tax for the year coming in ahead of consensus forecasts.

“Looking forward, although we remain cautious about the strength of consumer confidence and the timing of an economic recovery, we will be focusing on the retail basics of giving our customers great products in an inspirational shopping environment, whether in our stores or through one of our multichannel access points.”

Published on Tuesday 20 September by Editorial Assistant

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