Debenhams’ pre-tax profits rose 4.3% to £88.9m in its half year to February. We take a look at the City’s reaction to the results.

The department store chain posted a rise in profits

“We remain concerned about Debenhams’ trading prospects for a number of reasons.

“It remains too early in our view to judge whether Debenhams has been successful in weaning itself and its customers from its traditionally highly promotional high-low pricing strategy, with a view to driving a higher mix of full-price sales.

“Similarly, the group’s efforts to bring in more third-party retailers to better utilise the 10% (and rising) excess trading space within its stores.

“Online profitability remains more of an issue in our view”

Mark Photiades, Canaccord Genuity

“Online profitability remains more of an issue in our view than what is a respectable level of penetration, as does its ability to overcome identified pinch points in its online offer and the lag in many aspects of its service offer, compared with best-in-class operators such as Next.” - Mark Photiades, Canaccord Genuity

“First-half results are in line with expectations, and management has reiterated profit guidance, a good outcome given the extent of change to the business.

“Moreover, customers are responding well to the revised proposition, and improved trading momentum has been maintained, suggesting that sales can continue to be built on more solid foundations.” – James Collins, Stifel

“Debenhams’ first-half results have come in ahead of expectations as the new season Sale was brought forward into the first half. The group is showing clear progress with lower stock levels, improved full-price sales mix and continued rollout of new concession partners.

“Moving through the second half and towards peak 2015, we look for signs of better cost leverage, but believe the shares can make progress from here.” – John Stevenson, Peel Hunt

“Debenhams suffered from a multitude of self-inflicted and external issues last year, but we think it is taking some of the right steps to address these, including improving its service offer and keeping tighter control of inventory. However, we expect only a fairly gradual recovery.” - Richard Chamberlain, RBC Europe

“Debenhams reduced its number of promotional days by a further 14 in its first half (39 in last 12 months), leading to a 9% increase in own-brand full-price sales and 100bps of gross margin gains from lower markdown.

“50bps of this gain was reinvested into “first price, right price” whilst 50bps was offset by the weak womenswear sales in the autumn and the on-going shift into lower margin cosmetics and beauty.

“We assume that the temporary impacts will ease and Debenhams will be able to improve gross margin by 20-30bps a year as it continues to tighten stock levels (-5.6% in the first half).” - Caroline Gulliver, Jefferies