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Promotional changes leave Debenhams like-for-like sales flat

Debenhams has reported flat like-for-like sales for the 15 weeks to June 13, as changes to its promotional calendar diluted sales growth.

The department store retailer moved its New Season Spectacular into the first half of 2015, which reduced sales growth by about 1%.

However, it remains on track to meet its full-year margin guidance at the bottom of the 10-to-40-basis points range and full-year profit guidance of £111m, said chief financial officer Matt Smith.

Gross transaction value grew by 0.4% over the period, while online sales increased by 16.7%.

Debenhams held three fewer days on promotion compared with the same period last year, and chief executive Michael Sharp said it had made further progress in its strategy to drive full-price sales.

“The focus going forward will be on the looking breadth and depth of promotion, rather than the number of days,” he said. “This will be the next level of sophistication where we look at putting less stock into promotion and have a greater variety of promotion.”

Sharp said tight stock control meant Debenhams is on track to end the financial year with a 5% reduction in stock compared with the previous year.

The strategy to optimise 1m sq ft of underperforming retail space is continuing and Sharp revealed that 15 stores will carry Phase Eight’s new plus-size brand, Studio 8, next season. It will also launch Monsoon Kids into six stores.

Sports Direct concessions in are being trialled in four stores (Guildford, Bristol, Harrow and Southsea). A further four will start by the end of August, followed by a further eight from February 2016.

Debenhams is also launching a Sport Direct-branded footwear concession, selling brands such as Nike, Adidas and Puma for men, women and kids. This will launch in its Oxford Street store by the end of August.

“The five new stores opening before the end of the year [in Bradford, Wandsworth, Rugby, Beverley and Newport] will incorporate several of these new concessions,” he said.

Debenhams did not break out international sales but said they showed a similar pattern to the first half, as department store Magasin du Nord “continued to deliver good growth, helped by a recovering Danish economy”.

Sharp said that UK customers remained cautious in their spending.

“Although our customers are telling us they see that energy is cheaper, petrol is cheaper and their weekly budget for food is going further, so they are aware of the positive economic indicators, they also pick up the message that things are going to be tough for a while with the next phase of austerity.

“We haven’t witnessed any significant increase in consumer spending and that is consistent around all of the UK.”

@Tara_Hounslea

Readers' comments (1)

  • Margin and Debenhams are not two words you would usually put in the same sentence. Until they jettison their discount culture, they will continue to underperform as they are in a self imposed 'rock and a hard place'

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