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Debenhams to maintain discounting tactics indefinitely

Debenhams is maintaining its “strong cost disciplines” for the foreseeable future, dismissing analysts’ concerns that it is not a successful long-term strategy.

Speaking today as part of a trading update, chief executive Michael Sharp said the department store had not increased the number of days it was on promotion during the year to September 1 on the previous 12 months.

Although he said it may be possible to reduce the number of days the store offered discount by “a day here or three”, Sharp said he had no plans to reduce it in the near future.

“I could see in the future, if market conditions improve, the opportunity to reduce the number of days we are on promotion, but we are a long way from that at the moment because I can’t see any shift in consumer sentiment,” he told Drapers.

“That’s something I don’t apologise for… Within Debenhams, we will always have a promotional element to the business – it is a strength, not a weakness.”

Earlier, analysts raised concerns over the long-term feasibility of the department store’s continual discounting policy.

But Sharp dismissed this, saying he was interested only in “giving customers value for money”.

However, he went on to highlight the store’s recent marketing approach, which has moved away from an emphasis on Sales and towards the launch of winter and summer collections.

Investment in this campaign is also the reason the profit guidance was not above market expectations, despite sales having been higher than anticipated, Sharp explained.

Looking ahead to 2013, Debenhams is continuing to chase market share in womenswear, which already saw a 20 basis point-increase this financial year - most likely gaining from losses at Marks & Spencer, and womens shoes.

Sharp said he was aiming to double the latter, noting the store should be “bigger and better” than its current position as “fifth or sixth” in the market.

Readers' comments (2)

  • Planned promotions which don't reduce gross margins are just "smoke and mirrors" that don't offer customers real value for money

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  • Sharp's view in essence is the only way Debehmans can be 'successful' - and I use that word advisedly - is to offer 'value'. He isn't brave enough to run it as a quality store - a big mistake - and will almost certainly face the consequences further down the line. I hope some people don't get carried away with his short-term ism because that's exactly what it is.

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