Wednesday, December 19, 2018

Debenhams posts falling revenue amid “uncertain trading conditions”


Department store chain Debenhams has unveiled weak revenue as demand for clothing dropped amid “uncertain trading conditions”.

The group reported a 1.6% fall in like-for-like sales for the 15 weeks to 11 June and noted that its profits margins are likely to be lower than previously predicted.

Group like-for-likes rose slightly by 0.2% in the third quarter and 0.7% in the 41 weeks to the same date. Online sales grew 7% in the quarter.

Debenhams said it had slashed prices and used “tactical” discounting after sales in its womenswear division remained low since the beginning of the year.

Chief Executive Michael Sharp, who will be departing from the business on Friday stated that Debenhams was “holding its own” in a difficult clothing market.

“In response to more uncertain trading conditions in this period, particularly in clothing, we have focused on managing stock and margins and generating cash” Sharp added.

Sales also struggled as a result of customer uncertainties ahead of the EU referendum and the timing of Easter, Mother‘s Day and Father‘s Day; in addition to the unusually cold early Spring period.

Sharp agreed with high street competitor Next that there has been a change in spending habits with shoppers spending more on experiences such as holidays and eating out rather than retail goods.

The decline in turnover marks the reversal of the 2.4% rise seen in the previous six months, highlighting a difficult period on the high street.  

Further, Debenhams mentioned its intention to join the increasing eating-out culture by adding more food and drink concessions such as Costa Coffee and Patisserie Valerie to its stores. The group is looking to roll out another 30 food offers by autumn, and in 40% of its stores by Christmas.

Debenhams‘ international arm saw a rise in constant currency sales in its third quarter, although trading was mixed.

“I am confident that I am leaving the business in the hands of a very strong management team, who will continue to execute our strategy and support our new CEO, Sergio Bucher, through the next phase of Debenhams‘ development. Our wide product choice, clear destination departments and improving service proposition gives us a strong platform from which to deliver long term sustainable growth” Sharp concluded.