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Debenhams delivers increase in sales and profits

Debenhams increased both its sales and profits in the first half of its financial year despite the impact of an unseasonably warm autumn on clothing sales.

GENERAL MERCHANDISE

Debenhams delivers increase in sales and profits

In the 26 weeks to 28 February, pre-tax profit rose by 4.3% to £88.9 million while group like-for-like sales edged up 1.3%.

The department store chain said a refocusing of its promotional strategy resulted in a 9% increase in own brand full price sales. The company also benefited from tightly controlled stock and more flexible purchasing strategies in the period.

Debenhams chief executive Michael Sharp said: "I am pleased with the good progress we have made against the strategic priorities we set out last year. We have improved our multi-channel offer and successfully introduced the premium delivery options that we promised for the important peak period, which met with a positive response from our customers.

“The continued refocusing of our promotional strategy delivered a strong increase in full price sales, an improvement in value perception and enabled us to end the half with an improved stock position. Overall we delivered a good first half performance despite a difficult clothing season in the autumn and we are on track to achieve full year expectations.”

Debenhams’ online sales climbed by 12.7% with mobile penetration now accounting for 42% of online sales. In the four weeks to 10 January 2015, online sales increased by 28.9%, supported by the take-up of the new premium fulfilment services. Next day services accounted for 49% of orders in the seven days prior to Christmas.

Sales via click & collect grew by 22.1% in the 26 week period.

Gross transaction value for the UK rose by 2.5% to £1.3 billion. The retailer opened two new stores in Scunthorpe and Borehamwood which meant the UK store estate comprised 161 stores at the end of the period.

Despite adverse foreign exchange movements in the period, international sales increased by 1.5% to £303.5 million and EBITDA by 4.3% to £29.2 million.

Sharp added: "Looking forward, our customers tell us they are feeling a little more optimistic about the economic outlook, but they remain cautious. Accordingly we are continuing to plan prudently in the near term, while remaining focused on our strategic priorities, and are continuing to invest to ensure that our business is well-positioned to drive sustainable growth in the longer term."  

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