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Designers at Debenhams ranges deliver good sales growth
23
Mar '09
Debenhams plc, the leading department stores group, releases its trading update for the 26 weeks ended 28 February 2009. Gross transaction value for the 26 weeks ended 28 February 2009 was 0.3% higher than the prior year despite challenging trading conditions across the retail sector.

Debenhams has continued to take market share from its competitors in all major product categories, a positive trend which has now prevailed for 18 months. Excluding VAT, like-for-like sales for the period were 3.6% lower than last year.

Own bought ranges and particularly Designers at Debenhams ranges have delivered good sales growth and further progress has been made in our strategy to increase own bought participation. The strength of own bought sales has contributed to a positive movement in gross margin and we expect gross margin for the first half to be higher than last year.

The combined impact of higher gross transaction value and gross margin with the continuing tight management of costs and stocks alongside management's focus on the levers that drive cash margin will result in first half profit before tax and EBITDA being ahead of the previous year.

A strong focus on stock management has also resulted in terminal stocks being at a historically low level at the end of the first half. Our strategy of improving the consumer experience through the rationalisation of some of our ranges has also led to a significant reduction in stock densities.

Debenhams continues to generate strong cash flows and net debt at the end of the half was lower than the prior year. Since the end of the first half, we have taken the opportunity to acquire a quantity of stock and fixtures and fittings from the administrators of Principles as well as a licence to trade the brand. This will ensure continuity of supply to our business and accords with our intention to increase the own bought sales mix. Whilst the exact quantity of stock acquired is currently being finalised, we believe that this purchase will be beneficial for our business.

Commenting on the first half, Rob Templeman, CEO of Debenhams, said: “We are pleased with our performance during the first half of the year given the extremely difficult trading conditions experienced across the high street. We have continued to grow our top line and to take market share as consumers increasingly recognise the great value in terms of quality, price and design that our products and especially Designers at Debenhams deliver.”

“We have said previously that our main focus is on cash profit rather than just sales and our increase in profits during the first half despite the environment is testament to this aim and to the close management of resources throughout the business.” “Visibility for the second half remains poor and we will continue to run Debenhams in the expectation that the trading environment will remain challenging.”

Debenhams is a leading department stores group with a strong presence in key product categories including Womenswear, Menswear, Childrenswear, Home and Health and Beauty.

Debenhams plc


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