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Debenhams profits dip amid 'very difficult conditions'

Debenhams saw pre-tax profits slip 2.7%, despite like-for-like sales rising 2% in the year to August 31.

Pre-tax profit fell to £154m over the year, with chief executive Michael Sharp highlighting “the very difficult conditions”.

The department store said it gained market share in clothing both in store and online, which grew 46.2% in the period, and now accounts for 13.2% of all sales.

Highlights of the year included the launch of new Designers at Debenhams including Patrick Grant, Stephen Jones and Todd Lynn.

Gross transactional value rose 2.5%, up 2.3% in the UK and 3.7% internationally.

The business has ploughed investment into key areas, notably store modernisation. So far 12 stores have been completed and the Oxford Street branch is on schedule for completion this December.

While Sharp said he was confident with the improvements being made internally, he struck a note of caution around the wider economy.

“Whilst consumer confidence may be showing signs of improvement, we expect that household incomes will remain under pressure from inflation growing ahead of wages,” he said. “With this in mind, we remain cautious about the strength and pace of any consumer recovery in 2014 and expect the marketplace to remain highly competitive.”

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