Debenhams chief executive Michael Sharp said the second half of the year is showing “signs of early positive progress”, after a “very disappointing” first six months.
The department store announced this morning that annual underlying pre-tax profits fell 21% to £110.3m despite like-for-like sales increasing by 1% for the full year to August 30.
In April, Debenhams outlined a number of strategic priorities to address problems in the first half of the year and deliver sustainable growth. Sharp said today: “We feel this recovery shows that strategy is the right one and we are starting to see signs of early positive progress.”
Of one of the major issues to address, discounting, Sharp said: “There was a perception among some of our customers that we are always on Sale, which is not what we want.
“We worked to refocus our promotional strategy, which meant continuing the promotions we are known for such as the ‘spectaculars’ and Blue Cross events, but moving the smaller events out of our promotional calendar, which resulted in 25 less days of Sale than last year.
“We delayed our summer Sale by two weeks and did the same for our autumn spectacular, which falls into this accounting year. Our coat and boot event, which starts today, was scheduled for two weeks later than the same period last year.”
Another area where the retailer felt it lost out to competitors was the strength of its multichannel offer. “We learnt from last Christmas that convenience was the most important factor and we didn’t have next day click-and-collect and our order cut-off time for home delivery was 2pm,” said Sharp.
“This year we have introduced a next-day service and extended the cut-off time for home delivery to 10pm, which will increase our competitiveness.
“Click-and-collect made up 7.4% of online sales two years ago and increased to 22.3% last year. Now with our improved service we expect it to grow much more. We have also given more space in stores and upgraded systems to speed up the process.”
The period also saw Debenhams attempt to optimise 1m sq ft of its 11m sq ft that Sharp believes was underperforming through increasing its own brand offer and introducing new concessions. He praised Hammond & Co by Patrick Grant as a particular success, which has been rolled out to 80 stores from its initial launch in 20.
Debenhams has also started trials with Sports Direct (now in four stores), Mothercare (three stores), Costa Coffee (10 stores) and Monsoon (two stores).
Sharp said: “There have been encouraging signs so far and we will assess their performance in January following the Christmas period to determine whether they work or not.”