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Debenhams on course for pre-tax profits growth

Debenhams is on course to post a rise in profits for the full year, reporting strong online sales growth and market share gains in the crucial womenswear division.

The department store, which released a trading update for the 52 weeks to 1 September ahead of publishing its full year results next month, saw 2.3% growth in like for like sales, with a rise of 2.6% in total gross transaction value.

Online sales were up 40% during the period – ahead of the 13% market-wide rise.  The store modernisation plan has also led to a 6% uplift in those branches completed during the year, with any completed two years ago providing a further 1.5% growth.

Debenhams has “grown or maintained market share in all key categories”, with womenswear up 20 basis points in the 12 weeks to 5 August – a period the department store called “a very difficult season”. This was thanks to improvements in its marketing under the “Life is Fabulous” campaign, and changing perceptions about the brand, it added.

International growth will also boost the bottom line, thanks to six new store openings  and expansion in the digital delivery network, including the launch of the German website.

As a result, Debenhams is expecting to report gross margin growth of 30 basis points lower than 2011, but pre-tax profits ahead of last year and in line with previous guidance.

Chief executive Michael Sharp said: “I am delighted with our strong performance and the progress we have made in 2012.  To deliver like-for-like sales growth in these extremely challenging market conditions is highly creditable and we achieved this result by relentlessly focusing on our customers. 

“This performance is clear confirmation that our strategy to build a leading international, multi-channel brand is beginning to work.  It is also evidence of the calibre of the team charged with delivering this strategy and I would like to offer my sincere thanks for the hard work of all 30,000 employees during the year.”

The business would continue to make progress into 2013, Sharp added.

 

Readers' comments (1)

  • UK customer sentiment is of a discounter, regardless of the so called "Designers at Debenhams" that is portrayed, the UK customer waits for the early discounting that is a certainty every season, every year. The funding for this is mainly laid at the door of the supplier, cheaper and cheaper fabrics are used to show so called "value" and every tactic under the sun to further chip away at their margin, from early payment discount terms to retrospective turnover discounts. It would be interesting to know what percentage of product is actually sold at full price v discounted price and exactly how much of the profit is made from a straight forward buy price v sell price as i suspect this profit is made up from all sorts of stealth margin scheme's that the management have dreamt up. Surely they would be far better served by concentrating on quality and focusing on design as many their competitors , the oft banded obssesive line in these pages from Debs management is "increased market share" yes but at what price "cheap", isnt it far better to sell less of the right product at full price, this gives much more longevity to the brand, with people aspiring to wear and thinking it might be sold out in my size tomorrow, rather than "It's Debs i'll wait for the Sale"

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