Debenhams sales drop off

Sep 19 2007 by Iain Laing, The Journal

DEPARTMENT store Debenhams has failed to show a sales recovery as it warned yesterday the near-term retail environment could become more challenging.

The group said like-for-like sales were down 5% in the year to September 1, after trends seen in the first half of the year continued into the summer.

While Debenhams said it had been forced to increase mark-downs, it added that profits for the period were still likely to be in line with City hopes.

It is pinning its hopes of a recovery on a refurbishment programme and the opening of new sites, following the launch of two new department stores and four Desire stores in the past year.

The estate currently consists of 133 department stores and nine Desire shops. Chief executive Rob Templeman said: “Macro economic factors suggest that the retail environment will be more challenging in the short term, nonetheless we believe that the actions we have implemented across the business position us well for the new financial year.”

Changes in store space meant overall Debenhams sales rose 5.1% in the period to September 1.

Mr Templeman said the company was focused on improving the look of stores and boosting the quality and design content of its offering to customers.

He added: “We have invested selectively in price.

“This has proved effective, particularly in menswear where we have seen improving momentum in our market share.”

Richard Ratner, a retail analyst at Seymour Pierce stockbrokers, said he now looked for pre-tax profits of £131.2m in the company’s full-year results on October 23. His previous estimate had been £128m.

Nick Bubb, a retail analyst at Pali International stockbrokers, said the sales figures were “reassuring“ but added that doubts remained about dividend prospects and the company’s hopes for an improvement in fortunes. Debenhams only returned to the stock market in May of last year after a lucrative flotation for its private equity owners and managers.