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Sales up but margins down at Debenhams

Debenhams experienced its best ever December sales – but trading came at the cost of gross margins.

Like for like sales in the five weeks to January 5 were up 5% - the department store’s highest ever figures for December. This coincided with Debenhams’ first Christmas advertising campaign in six years.

Debenhams also saw online sales ahead of expectations, recording a revenue increase of 39% for the 18 weeks to January 5. Overall like for likes during this period were up 2.9%.

However, the business noted that the high street was “more promotional than the prior year”, which led Debenhams to offer more Sales in the run up to Christmas.

As a result it has downgraded its guidance on gross profits for the period from 10 basis points above last year to 20bps.

Chief executive Michael Sharp said he was “pleased” with performance overall.

 “The trading environment was extremely challenging but we focused on meeting the needs of our customers and executing the four pillars of our strategy,” he said.

 “We continue to believe that whilst consumers have become acclimatised to the new economic reality, we don’t anticipate a significant change in consumer confidence in the remainder of the year.  We remain committed to prudent investment in key areas of the business to deliver long-term sustainable growth as well as driving shareholder value.”

Readers' comments (1)

  • Debenhams are always discounting and using words like 'promotional activity' is so shallow. They will always put turnover in front of margin, as many consumers use them because they're cheap and would be unlikely to use the store otherwise.

    Brands cannot be happy that much of their product is being devalued as this cannot bode well for the future. Debenhams is creating a vicious circle of discounting, with a negative image, that ultimately can only go one way...

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