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Debenhams reports slight growth

Debenhams has reported minor growth in its second quarter, as it confirms plans to open Sports Direct and Costa concessions.

The results were for the 14 weeks to June 7. Group like-for-like sales were up 0.7%. Group gross transaction value for the period was up 1.6% on the previous quarter.

June 14 is used as a benchmark for sales data. Group online sales increased by 8.4% in the 15 weeks to June 14, representing 15.2% of total sales. Online sales grew by 18.8% for the 41 weeks to 14 June. 

Debenhams said it is looking to raise a £200m, seven-year bond issue. Alongside existing debt, this would mean it held some £650m of debt.

Discounts will be cut down, with the revised promotional strategy expected to help deliver better growth for the second quarter. Its summer Sale is starting two weeks later than last year on June 26.

Chief executive Michael Sharp said: “Our foundation is the strength of our product proposition, which meets our customers’ needs for choice, quality and value. In April, we set five priorities to address the challenges we faced in the first half of the year. Our performance in the second half reflects the work we have done, particularly to refocus our promotional activity.  Although early days, this strategy is delivering higher full-price sales and we expect to see the benefit through gross margin progression in the second half of the year and in 2015.

“While it is clear consumers are aware of improvements in economic indicators, they are not yet seeing a significant improvement in their disposable income. Our outlook for the full year remains unchanged.”

Sharp confirmed long-rumoured trials of new concessions, including Sports Direct and Costa, will start before the end of the financial year.

In January, Sports Direct bought then swiftly sold a 4.6% stake in Debenhams. It then used a put option on a larger 6.6%, giving it the right to buy back shares at a later date. The move will see its brands – which include Hot Tuna, Kangol and traditional sports brands such as Slazenger and Dunlop – sold at in-store concessions. The initial openings will be at the Debenhams in Harrow and Southsea in August.

Sharp said this week convenience is now “the single biggest factor” in determining where shoppers spend their money in the three weeks before Christmas. To bring it in line with competitors such as Next, which has been widely praised for its next-day delivery options, Debenhams is investing in delivery logistics. To increase delivery speed, click-and-collect orders will be able to be fulfilled using store stock later this year, for example.

“Across the UK, we saw strong growth in click-and-collect sales and sales from in-store kiosks, which demonstrate the continuing importance of stores in a multichannel world,” Debenhams said in a statement.

Readers' comments (2)

  • 'Discounts will be cut down' Really? This is Debenhams we're talking about. Their whole raison d'être is discounting and I'd be very surprised if they changed from this (non) winning formula.

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  • It would be interesting if Drapers were to provide like for like comparisons with House of Fraser, John Lewis, M&S and Next, Littlewoods etc when these kind of articles are written.

    It's the job of every Chief Exec to paint a rosy picture and manage market expectations...

    Comparisons better reflect performance and help to identify what is working (or not).

    For my part, Debenhams has enormous potential, however there is also an enormous amount of things they can do better!

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