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Profits to climb at Debenhams

Department store chain Debenhams expects profits to rise strongly this year after a shift in product mix boosted margins.

Debenhams said that profits would rise about 20% year on year in the year to August 28, or 35% compared to two years ago, to approximately £150m before exceptionals.

Debenhams posted a 1.4% increase in gross transaction value for the year, or 9.6% including Danish department store business Magasin du Nord, which was bought last November.

Like-for-likes were flat over the year, affected by the conversion of trading space from concessions to own-bought product, which generated better margins for the department store. Over the year the retailer introduced collections such as Principles by Ben de Lisi and H! by Henry Holland.

Debenhams said it had made market share gains in menswear and childrenswear. Womenswear market share was hit by lower own-bought sales densities.

Debenhams chief executive Rob Templeman said: “We have said throughout 2010 that this would be a year of change for Debenhams and a year when the structural shift towards own-bought merchandise means that we will judge our performance on profit movement rather than sales.”

He warned that the trading outlook remained uncertain but was confident Debenhams would continue to make progress.

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