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Debenhams like-for-likes slow, market share up

Debenhams said like-for-like sales at the department store chain were impacted by the snow in December but that it had made market share gains across the board.

Debenhams said that group like-for-like sales in the 19 weeks to January 8 were impacted by between 2.5% and 3% because of the snow in the run up to Christmas.

During the period, like-for-like sales rose slightly by 0.3% including VAT and dropped by 1.3% excluding VAT.

Market share gains

The department store made market share gains in womenswear for the first time since the department store began the conversion of about 500,000 sq ft of its space to own brand product in September 2009. Womenswear market share rose by 10 basis points according to data from Kantar Worldpanel Fashion for the 24 weeks to October 31.

Total market share rose by 10 basis points with menswear and kidswear notching up a 30 basis point and 20 basis point increase respectively.

Gross margins

Group gross margin remained ahead of last year during the 19 weeks. Debenhams cited its strategy of increasing the mix of own-bought merchandise and its focus on margin management.

Debenhams said its stock levels remained “firmly under control” and it forecasted that terminal stocks would be at an all-time low at the end of the first half.

Multichannel and stores

Debenhams Direct and the department store’s in-store ordering service recorded a sales increase of 88.5% during the 19 week period.

Danish department store Magasin du Nord reported like-for-likes up 11.5% on a Danish kronor basis, a 5.5% rise in sterling.

Debenhams invested in new stores, store refits and increased multichannel access points during the period.

“We have made good progress in terms of both gross margin and market share and I am particularly pleased that our market share in women’s clothing has begun to demonstrate growth.”

Debenhams chief executive Rob Templeman

It opened a department store in Bath in September and is set to open a further two in the remainder of the financial year; a department store inWakefield and a Desire store in Fareham.

Store refits were completed in Leeds City Centre, Merryhill, Milton Keynes, Portsmouth  and Romford. A further four to six refits will commence in the second half of the year.

A new franchise store opened in Yerevan in Armenia and the department store will open 100 more franchise stores in the medium term.

During the period, Debenhams launched an app for the iPhone and an online video format called Debenhams TV as well as self-service kiosks to improve availability and ranging for instore customers.

The department store is gearing up for the launch of its Designers at Debenhams new format Edition, with collections from designers including Jonathan Saunders, Preen, Jonathan Kelsey and Roksanda Ilincic launching in February 2011

‘Cautious’ for 2011

Debenhams chief executive Rob Templeman said the department store’s performance had been “pleasing”. “We have made good progress in terms of both gross margin and market share and I am particularly pleased that our market share in women’s clothing has begun to demonstrate growth,” he said.

He added: “Looking forward, we are cautious about the robustness of consumer sentiment for the remainder of the financial year. Despite this, we have a clear strategy of self-help initiatives which focus on gross margin management, driving market share and growth through expansion and investment which we believe will enable Debenhams to continue to make progress over the coming months.”

On November 30, Debenhams repaid £150m of debt and cancelled its existing £806m bank facility and drew on its £650m forward start facility negotiated in July 2010.

The new facility includes a £400m revolving credit facility  that allows the group to manage working capital efficiently and minimise interest costs of borrowings held alongside surplus cash.

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