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Debenhams sales and profits edge up as CEO prepares to step down

Debenhams’ group like-for-like sales were up 2.4% on a constant currency basis for the first half of its financial year, while its group profit before tax increased 5.5% to £93.8m.

Debenhams

Debenhams

Presenting the results, chief executive Michael Sharp confirmed his plans to exit the firm this year, as first revealed last October, and said he has formally submitted his resignation to the board.

An announcement on his replacement is expected within the next few weeks. 

The department store group’s gross transaction value was up 1.6% to £1.6bn for the 26 weeks to February 27, while group EBITDA was up 1.3% to £153m.

Group gross margin was up 20 basis points for the half year, compared to the same period in 2015, and the full price sales mix improved by 5.1%. This was delivered against background of “refocused promotional activity and less discounting”, the company said. 

Currency headwinds took a toll on international profit, with EBITDA outside the UK down 5.8% to £27.5m.

Debenhams continued to optimise space during the period. Over 50% of targeted space is now filled with new brands, formats and services, and the firm is on track to fill 75% by Christmas.

Online sales were up 10% and online EBITDA was up 12% during the half. Mobile now represents 50% of all online traffic.

During the period a new international web platform launched, enabling local currency, payment and local language options to support further its international multichannel growth.

Sharp said: “A strong operational performance resulted in a record Christmas, and further growth in first half profits against a good performance in the prior year. Our customers are responding positively to our multichannel strategy, finding our mix of products and brands both compelling and great value for money.

“Although there is plenty more to do, we are on track to deliver full year results in line with market expectations. When I leave the business later this year I am confident it will be in a good position to deliver continued sustainable growth under a strong and capable management team.” 

As previously reported by Drapers, contenders for the CEO job are thought to include Mothercare boss Mark Newton-Jones, former Karen Millen chief executive Mike Shearwood and Alistair McGeorge, former chairman of New Look and ex-managing director of Australian Woolworths business The Big W.

Drapers understands John Walden, CEO of Home Retail Group, is also in the running.

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