Debenhams first half profits hit by snow
Department store Debenhams has reported a fall in first-half profits after snow disrupted trade in January.
In the 26 weeks to 2 March 2013, pre-tax profit dropped 5.4% to £120.3 million. However, group like-for-like sales increased by 3.1% as the retailer saw strong multi-channel growth and grew its market share in key categories.
Group gross transaction value rose 3.5% to £1.53 billion.
Debenhams said the market in the UK had been “challenging and competitive” especially during the peak Christmas trading period. However, the retailer achieved its highest ever December sales with like-for-like sales rising by 5%, helped by its first Christmas marketing campaign for six years.
Never Miss a Retail Update!Snow in the UK disrupted trade for two weeks at the end of January when like-for-like sales fell by 10%, impacting profitability in the first half.
Michael Sharp, Debenhams chief executive said: “We made progress during the first half although snow in late January meant we did not achieve the profit outcome we had expected. Like-for-like sales grew for the fourth consecutive half and we saw positive market share momentum in key categories.”
First half online sales increased by 46.2% to £194.4 million and now account for 12.7% of sales. Mobile was the fastest growing channel with sales up 265% compared to the previous year.
International transaction value rose 1.6% to £280 million in the period boosted by a successful trading in Denmark where like-for-like sales rose by 9.8% in local currency. The total number of international stores stood at 79 at the end of the first half, including 62 franchise stores and 17 owned stores.
At the end of the period, Debenhams operated 155 stores in the UK. The retailer said its investment in a store modernisation programme was generating “good returns” and “helping to mitigate difficult market conditions”.
Looking ahead Sharp said: “We expect to make further progress in the second half despite consumer sentiment remaining weak and challenging market conditions. We are committed to the opportunities afforded to us by the four pillars of our strategy to build a leading international, multi-channel brand. We are sure that this strategy is right for Debenhams and of the benefits it brings to the business and its shareholders.”
