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Sales dip at Debenhams amid 'market volatility'

Debenhams’ group like-for-like sales fell by 0.9% for the 15 weeks to 17 June amid ‘market volatility’ and a weaker clothing performance. 

Like-for-like sales climbed by 1.8% in the 41 weeks to 17 June. 

Like-for-like sales in constant currency dropped by 2.4% compared with last year’s 15-week period, and decreased by 0.7% in the 41-week period.

The group’s gross transaction value for the period dipped 1% on the previous quarter. It was up 1.7% over the three quarters.

However, online sales grew in the 15 weeks by 7.9%, and 12.6% over the 41-week period.

Debenhams said it expects profit before tax for the year will be within the range of market expectations, but that the outcome could be towards the “lower end” of the current range if market volatility continues.

There has not been any change made to gross margin guidance for the 2017 financial year, but the department store is tightening guidance on cost growth to 3%, equating to 1% in constant currency terms.

According to Debenhams, its beauty, accessories and food and drink offerings have “helped to mitigate the impact of a weaker clothing market”.

It added that the foreign exchange impact has been “positive” in this period but underlying markets have been mixed, with positive growth in Denmark offset by weaker trading in the Middle East and the Republic of Ireland.

Debenhams chief executive Sergio Bucher said: “We are making progress in implementing our exciting and ambitious new strategy, Debenhams Redesigned, which will make us the destination for social shopping. We have already started to deliver changes that will improve service for our customers and simplify and focus our operations.

“As industry data has confirmed, May was a tough month for retailers and we continue to see volatility in trading week to week. As a result we are focused on delivering cost control and self-help through our “fix the basics” plan. We continue to build good foundations for longer term growth at Debenhams by becoming a destination, digital and different.”

Bucher unveiled the new strategy in April focusing on experiential shopping, digital growth and improving efficiencies by simplifying the business.

As part of this initiative it has been consulting on closing 10 UK stores over the next five years, as well as a central distribution centre and 10 smaller regional warehouses.

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