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Debenhams' posts marginal rise in H1FY'12 sales
Apr '12
Debenhams' has released its financial performance for the first half (26 weeks to 3 March 2012). Debenhams' said it was pleased with the financial performance in the first half given the difficult economic environment and the impact of unseasonably warm weather in the autumn, which affected sales of key product categories such as outerwear.

Group gross transaction value for the period grew by 1.4% to £1,483.6 million. Excluding Magasin, gross transaction value was £1,346.0 million (H1 2011: £1,328.8 million). Statutory revenue increased by 1.3% to £1,238.3 million.

Group like-for-like sales increased by 1.4% including VAT and by 0.3% excluding VAT.

Magasin has continued to perform well. Like-for-like sales increased by 0.9% on a Danish kroner basis and by 1.7% on a sterling basis.

Market Share:
Total fashion market share for the 12 weeks to 18 March 2012 was flat at 4.7%. Womenswear share fell by 10 basis points as we completed the work to replace closed concessions. Menswear grew by 20 basis points whilst childrenswear was flat. We continue to see market share growth in categories which have been especially targeted for share growth, such as footwear and health and beauty.

Margins and Costs:
Gross margin on a Group basis was 30 basis points lower than last year in the period, in line with guidance. This includes Magasin where gross margin increased by 140 basis points as a result of a higher own bought sales mix.

Excluding Magasin, gross margin fell by 50 basis points, largely as a result of strong sales growth in the lower margin health and beauty category. For the full year, our gross margin guidance remains broadly flat.

The Group continues to manage costs tightly. Total costs (excluding interest and tax) increased by 1.7% in the first half. Full year expectations for the major cost categories remain in line with guidance provided at the start of the year.

The net interest charge decreased from £12.4 million in the first half of last year to £7.8 million this year due mainly to lower interest costs associated with the bank facilities which were refinanced in July 2011 and lower net debt.

Group EBITDA for the first half fell by 1.0% to £181.1 million. Group operating profit declined by 2.0% to £134.9 million.

Profit before tax was ahead of market consensus for the first half, up 1.4% at £127.1 million (H1 2011: £125.3 million). Headline profit before tax which adds back amortisation of capitalised bank fees of £1.4 million (H1 2011: £3.9 million) was £128.5 million (H1 2011: £129.2 million). Going forward, we will discontinue the use of headline profit before tax as it will continue to converge with the reported number.

Strategy Update:
We set out the four pillars of our strategy to create a leading international, multi-channel brand in October 2011. They are:

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