Debenhams full-year profit down 21% as expected
Debenhams saw its full year underlying pre-tax profit drop by 20.6% to £110.3 million which was in line with expectations.
Group like-for-like sales edged up 1% in the year to 30 August while statutory group revenue rose by 1.3% to £2.3 billion. Reported profit before tax was down 23.9% at £105.8 million.
In the UK operating profit for the year decreased by 24.3% to £96.3 million. This followed lower than expected sales in the run-up to Christmas which resulted higher levels of discounting in the January sales. Revenue grew by 0.3% to £1.9 billion.
Debenhams said action taken to refocus its promotional strategy in the second half of the year led to a better UK performance in the period although profitability was also impacted by a £7.1 million increase in costs due the move to a new London head office.
A refocusing of promotional strategy resulted in a 10.6% increase in own brand full price sell-through in second half. In addition, more conservative sales targets and tighter buying levels led to a 5.3% reduction in like-for-like closing stock.
The retailer’s international business increased its revenue by 6.3% to £410.6 million. Operating profit rose by 14.5% to £32.3 million.
Debenhams' multi-channel business continued to grow with online sales up 17.6%, to represent 15.3% of group sales. Online EBITDA increased by 20.5%.
In the UK, Debenhams opened four new stores in the year at Cheshire Oaks, Haverfordwest, Hereford and Leamington Spa. This added 169,000 sq ft of trading space.
The retailer also completed the refurbishment of its flagship Oxford Street store which is trading in line with expectations.
Debenhams chief executive Michael Sharp said: "After the challenges we faced in the first half, everyone in the business has been focused on addressing the issues we identified and on delivering on the priorities we set out in April to deliver long-term sustainable growth. Our performance in the second half reflects this with operating profit up on the previous year.
"We achieved higher full price sales and fewer days on promotion as a result of greater clarity on our promotional calendar resulting in an improved gross margin. We have also made good progress on our work to drive better returns from our space.
“Developing a more convenient and competitive online fulfilment offer has been a key priority and we enter this year's peak trading period with a much improved range of delivery options. We expect further benefits to accrue from these priorities going forward.”
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