Debenhams on track to meet profit forecast despite drop in sales
Debenhams said its like-for-like sales edged down 0.2% in its third quarter following a weaker trading environment since the turn of the year, particularly for clothing.
In the 15 weeks to 11 June Debenhams’ group gross transaction value rose by 0.5%, taking the cumulative year-on-year performance to growth of 1.3%.
Online sales increased by 7% in the period with mobile now representing over 50% of UK online orders.
While battling against a more volatile trading environment, Debenhams said it had increased the mix of non-clothing sales to support its performance. It is also taking action to manage seasonal stocks, particularly in womenswear, including selected promotional activity. As a result, it expects to end the year in a clean seasonal stock position, in line with plan.
Despite volatility in the trading environment, Debenhams currently anticipates that full year pre-tax profit will be within the range of market forecasts.
Michael Sharp, the outgoing chief executive of Debenhams, said: “Our strategy remains unchanged, with further progress in driving our non-clothing mix, continuing to improve service for multi-channel customers, and offering a wider choice of products and services in under-optimised space. In response to more uncertain trading conditions in this period, particularly in clothing, we have focused on managing stock and margins and generating cash.”
Debenhams said its space optimisation programme was progressing with 75% of one million square feet to be filled by Christmas. The department store is rolling out a further 18 Jack & Jones concessions by October and launching Claire’s Accessories in 15 stores. Having trialled two furniture display concepts in Manchester and Gateshead, it plans to open a further six for the Autumn/Winter season.
Sharp added: “I am confident that I am leaving the business in the hands of a very strong management team, who will continue to execute our strategy and support our new CEO, Sergio Bucher, through the next phase of Debenhams’ development. Our wide product choice, clear destination departments and improving service proposition gives us a strong platform from which to deliver long term sustainable growth.”
