Debenhams makes good progress despite profit fall
Debenhams has said it has made good progress in its new strategy to become a leader in social shopping as it reported a decline in full year profit.
In the year to 2 September, underlying pre-tax profit was down 16.6% to £95.2 million before exceptional charges of £36.2 million relating to its Debenhams Redesigned strategy. Reported pre-tax profit fell by 44.2% to £59 million.
Group gross transaction value was up 2% to £2.95 billion. Like-for-like sales increased by 2% across the business but were flat in the UK.
Meanwhile, online sales rose by 12.7% driven by a 57% uplift in mobile orders.
In a statement, Debenhams said it is embarking on several strategic partnerships that it hopes will accelerate the pace of change. These include the upgrading of its mobile website in partnership with Mobify to make it faster and more responsive, and investment in digital beauty services provider Blow.
It has also announced a new partnership with Sweat! to trial in-store gyms, initially in three shops.
In addition, the retailer has established “test labs” for new format trials in its new Stevenage and Wolverhampton stores, which it says are delivering “very positive” initial results.
Sergio Bucher, Debenhams chief executive, explained: “We are making good progress with implementing our new strategy, Debenhams Redesigned, and are encouraged by the results from our initial trials, as well as the number of exciting new partners who want to work with us. There is a lot to do but I am delighted with the enthusiasm and flair shown by my colleagues as we embark on this journey.”
Debenhams has also announced that it will be closing its Eltham and Farnborough stores in line with a store review which identified 10 stores at risk of becoming unprofitable over time. It has also exited four franchise markets and plans to continue to leave low-profit, low growth franchise locations.
Looking ahead, Bucher said: “The environment remains uncertain and we face tough comparatives over the key Christmas weeks. However, we are well prepared for peak trading and the early signs from our activity to date confirm that we are moving in the right direction towards a successful and profitable future for Debenhams.”
