Mixed message in Debenhams figures

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Published: Tuesday 13th January 2015 by The News Editor

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A curb on promotions boosted Christmas sales figures from Debenhams today but failed to prevent fresh questions over its turnaround plans.

The group, which has 248 stores in 28 countries, l ifted like-for-like sales by 4.9% in the four weeks to January 10 after it boosted online trading by almost a third and held ten fewer days of sales.

The performance was in contrast to the previous year’s Christmas, when it was forced to issue a profits warning due to poor sales and a botched promotional strategy.

The company has since overhauled its pricing and online offer, resulting in a 12.1% increase in the number of own bought products sold at full prices.

It reported record group sales in the seven days prior to Christmas and a g ood performance on Black Friday when an existing promotional event helped sales rise 10.3% over the week. Online orders on the day jumped 125%.

However shares in the department store slid 8% after it warned that margins had been squeezed because a tough period for clothing sales resulted in an increased focus on lower margin trading categories such as beauty items.

Hargreaves Lansdown analyst Keith Bowman said: “The group has delivered a mixed and broadly disappointing update. Full year profit estimates are, at best, likely to remain unchanged.”

A broader measure of the firm’s trading showed that over the 19 weeks to January 10 the firm’s same store trading fell 0.8% due to warm autumn weather which impacted clothing sales.

The department chain said it sold 250,000 women’s handbags between Black Friday and Christmas, and two pairs of gloves a minute in December, which is over 85,000 pairs.

Chief executive Michael Sharp said he was pleased with the company’s performance in the critical Christmas trading weeks.

He added: ” Our performance steadily improved following the well documented challenges in the clothing market in the autumn.

“We now have a competitive online proposition with next day delivery to home and next day click and collect, which customers took full advantage of and which performed well over Christmas.”

The firm said the outlook for the coming year would again be challenging.

It said: “Looking ahead to the rest of the financial year, we don’t anticipate a significant change in consumer confidence and we believe the trading environment will remain competitive.”

With 10% of its UK space seen as under-performing, the company has over the last year brought in major concessions to help lift sales.

It is currently testing Costa coffee outlets in 10 stores, Sports Direct in four, Mothercare in three and Monsoon in two stores. It said it will decide on a wider roll-out of these concessions in the next few months.

Published: Tuesday 13th January 2015 by The News Editor

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