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Debenhams tops expectations with 4.3% profit rise

Debenhams has beaten predictions, posting a 4.3% rise in pre-tax profit to £88.9m during the six months to February, aided by fewer promotions boosting full-price sales and an improved online offer.

The department store chain is confident it will achieve full-year expectations after it also recorded a 1.3% increase in like-for-like sales, despite what it described as a “difficult clothing season” in autumn.

It said a reduction in promotions resulted in a 9% increase in own-brand full-price sell-through. Meanwhile, new delivery options such as click-and-collect, launched October 11, helped drive online sales up 12.7% to £271.8m.

UK operating profit alone for the half-year increased 5.7% to £74.5m.

Plans to optimise space in-store, which resulted in the trial of Sports Direct and Mothercare shop-in-shops, provided “encouraging initial results” prompting a roll-out to more stores, it said in the trading update.

It was expected that the results would be largely flat against the previous year, when it recorded a pre-tax profit of £85.2m.

During the period, Debenhams opened two new stores, in Scunthorpe, Lincolnshire, and Borehamwood, Hertfordshire, and closed its clearance outlet in Newbury, Berkshire. It has eight new stores in the pipeline in unknown locations. Five stores will open in autumn and the remaining three will follow over the next three years.

Mothercare’s chief financial officer Matthew Smith joined during the half year, appointed to the same role.

Debenhams chief executive Michael Sharp said the business has made “good progress”.

“We are continuing to plan prudently in the near term, while remaining focused on our strategic priorities, and are continuing to invest to ensure that our business is well-positioned to drive sustainable growth in the longer term,” he added.

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