Debenhams forecasts profits rise as like-for-likes grow

The department store group said in a pre-close statement that like-for-like growth stepped up in pace during the year to September 1 despite battling “challenging markets” .

Debenhams recorded a 3.8% increase in like-for-likes in the 10 weeks to September 1, ahead of the 2.3% like-for-like reported for the whole year.

Total sales rose 2.6% during the year and were up 4.1% in the 26 weeks to September 1 and 4.4% in the final 10 weeks of the period.

Chief executive Michael Sharp said he was “delighted” with the performance but cautioned that the market is likely to remain tough.

He said: “We do not anticipate a significant change in the economic environment in the near future but we expect to continue to make progress in 2013.”

The retailer said its store modernisation programme is paying off. It reported stores modernised for one year have achieved a sales uplift of around 6% while stores completed two years ago have managed a further uplift of around 1.5% during the second year.   

In line with previous updates, Debenhams expects gross margin to be down this year because of “a weather-related sales mix change towards health and beauty as well as higher concession sales resulting from our moves to add choice”.

Debenhams, which claims to be the 11th biggest UK online retailer by traffic volume, said online sales had risen 40% in the year, ahead of wider market growth of 13% according to Kantar Worldpanel.

Traffic to the retailer’s website rose 50% driven by strong growth in mobile which was up 27%.

Debenhams said it is investing in merchandising, buying, marketing, multichannel and customer analytics.

The retailer’s Danish Magasin du Nord chain performed well during the year, when like-for-likes rose 1.6%. There was “good growth” in Debenhams international division, which trades in 67 countries.

Sharp said: “I am delighted with our strong performance and the progress we have made in 2012. To deliver like-for-like sales growth in these extremely challenging market conditions is highly creditable and we achieved this result by relentlessly focusing on our customers.  

“This performance is clear confirmation that our strategy to build a leading international, multichannel brand is beginning to work.”