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Debenhams gains market share as sales rise

Debenhams said that like-for-like sales at the department store were on an improving trend and that it has gained market share from rivals.

The department store, which has 158 stores in the UK and Republic of Ireland, said like-for-like sales rose 0.3% in the 26 weeks to February 27.

Gross transaction value, excluding the performance from Danish department store Magasin du Nord which Debenhams acquired in November, was 1.7% higher during the first half than in the same period last year.

In the eight weeks since Debenhams’ Christmas trading update, when it reported like-for-likes rose 0.1% over the 18 weeks to January 2, like-for-like sales and gross margins had been on am improving trend, said the retailer.

Debenhams said that it continued to make gains in marketshare with menswear and kidswear share both increasing over the 24 weeks to January 31, according to Kantar Worldpanel data. However, in womenswear Debenhams’ marketshare was impacted by its programme of converting space to own-bought labels.

In the fourth quarter of the last financial year Debenhams began the process of converting some 500,000sq ft of space to own-bought brands, reducing concession space. Debenhams said that the detrimental effect of that move is expected to impact like-for-like sales by 1.5% throughout the current year. It also added that the second half of 2010 will benefit from the enhanced productivity of 150,000 sq ft of space which is yet to be optimised.

Gross margin during the half was “significantly” higher than last year, said Debenhams, as a result of the strategy and careful stock control. Terminal stocks ended the half at an historical low of 2.64%. As a result of the higher sales and gross margin, EBITDA and profit before tax for the first half are expected to be higher than last year.

Debenhams opened four stores during the period, including stores in Eldon Square in Newcastle-upon-Tyne and three new smaller format Desire stores in Kidderminster, Monks Cross and Witney. It has also entered Iran and Vietnam on a franchise basis.

Debenhams warned that there would be some disruption in the coming months caused by the start of its refurbishment programme announced earlier this year. Major store refits in Glasgow and Manchester began last month.

Multichannel sales rose over 80% during the first half and the retailer now offers in-store ordering, click and collect and international deliveries.

Chief executive Rob Templeman said: “Against the backdrop of challenging trading conditions we have delivered profit growth on a consistent basis for the past 18 months.

“In the second half we will continue to focus on our self-help measures. The impact of the disruption we saw in the fourth quarter of last year due to the closure of concessions and the significant space shift will start to dissipate and we expect to benefit from enhanced space productivity in the second half from our new brands.”

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