Debenhams sales slide in tough market
DEBENHAMS said yesterday it remains cautious about consumer spending as sales dropped in the third quarter – offset by a rise in profit margins.
But the retailer said that its Designers at Debenhams ranges were still performing well and predicted strong trading for the rest of the year.
Like-for-like sales decreased by 0.4 per cent over the 42 weeks to 19 June.
However, analysts are still forecasting that Debenhams will achieve pre-tax profits of £144m in the year to 3 August, up from £124.9m the previous year.
Debenhams also said yesterday that it had sealed a deal for the Faith shoe chain, which had plunged into administration.
The company attributed part of the reason for its increase in profitability to being very “tight on stock”.
Meanwhile it has refinanced its debts – which stood at £512m at the end of February – helping its share price to nudge up yesterday.
Chief executive Rob Templeman said tax increases and public sector spending cuts announced in the coalition government’s emergency Budget would hit consumers.
But he said the strategy of increasing the proportion of own bought sales, and the contribution of recently acquired Danish department store group Magasin du Nord, would help Debenhams to thrive.
Templeman insisted improvements to the group’s website and changes to ranges would also fuel healthy profits in 2009-10 and 2010-11. Debenhams said gross transaction value rose 1.1 per cent, excluding Magasin du Nord.