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Debenhams Christmas sales up as margins squeezed

Debenhams has reported like-for-like sales increased 4.8% during the four weeks to January 10, with online sales up 28.9%, but warned that gross margin will be towards the lower end of guidance for the year as a whole.

The department store retailer recorded record sales in the week before Christmas and “good” performance on Black Friday, with sales in the week up 10.3% and online orders up 125% on the day itself.

It reported good progress on the five priorities outlined in April 2014, including 10 fewer days on promotion and a 12.1% increase in own-brand full-price sell-through.

Debenhams said fewer promotions inevitably led to a slowing in the rate of sales growth online given that it is an inherently more promotional channel.

Stock levels are said to be under control, with terminal stock forecast at “historically low levels”.

Gross transaction value increased by 5.9% for the four weeks to January 10.

The retailer said strong performance from lower margin categories such as some concession brands, combined with a challenging season in clothing will result in gross margin being towards the lower end of the 10 to 40 basis point range for the full year.

It said full year cost guidance will be at the lower end of the 2% to 4% increase previously stated, thanks to tight cost control during the period.

Michael Sharp, chief executive, said: “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.”

Demand for click-and-collect increased during the period and peaked at 39% of total online orders during the final few days before Christmas.

Readers' comments (2)

  • Interesting their figures include 2 weeks post Christmas. Suggests the increase in like for like was driven by an 'even more discounted' post Christmas sales period.

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  • Debenhams are just discounters. Many of the brands they stock are very uneasy about being in there, but they like the business. Debenhams are going in the wrong direction and they should turn back before it is too late.

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