Department store Debenhams has seen total sales for its full year rise 2.6 per cent and announced today that full year pre-tax profit is expected to be ahead of last year.
While profit is currently in line with expectations, like-for-like (LFL) sales jumped 2.3 per cent in the 52 weeks to September 1st 2012 despite the “challenging market”, as the retailer continues to see strong growth in its international and online propositions.
In its trading update, the retailer also noted that online sales grew 40 per cent over the year, considerably ahead of the market while Debenhams.com saw visitor numbers increase by over 50 per cent.
Strong growth in mobile channels, up 27 per cent on the previous year, helped drive sales thanks to the introduction of QR codes for mobile over the period as well as the use of Wi-Fi in stores.
Neil Saunders, Managing Director of analyst firm Conlumino, believes that Debenhams‘ far-reaching growth strategy is the primary cause of its success.
He explained: “Store refurbishments have also contributed to the uplift in sales.
“These allow Debenhams to display its products in a much more compelling and engaging way and, in our view, help to drive up footfall, conversion and transaction values.
“Debenhams estimates that modernised stores are now achieving uplifts of around six per cent in their first year with a further 1.5 per cent uplift in the second year.
“These results indicate that, during a difficult year for retail and clothing in particular, Debenhams has continued to make good progress on a number of fronts.
“It is especially encouraging to see that over recent periods sales growth has strengthened with the past ten weeks seeing total growth of 4.4 per cent and LFL growth of 3.8 per cent.”
However, the retailer suffered as a result of a “weather-related sales mix change” it said and as such gross margin is expected to be 30 basis points lower than last year, as previously reported by the company.
Despite this, Debenhams‘ CEO Michael Sharp remains positive in his outlook, commenting: “I am delighted with our strong performance and the progress we have made in 2012.
“To deliver like-for-like sales growth in these extremely challenging market conditions is highly creditable and we achieved this result by relentlessly focusing on our customers.
“This performance is clear confirmation that our strategy to build a leading international, multi-channel brand is beginning to work.
“It is also evidence of the calibre of the team charged with delivering this strategy and I would like to offer my sincere thanks for the hard work of all 30,000 employees during the year.
“We do not anticipate a significant change in the economic environment in the near future but we expect to continue to make progress in 2013.”
