The department store group brought forward its trading update, scheduled for next month originally, to reassure the City about performance and prospects following a wave of speculation that it was in danger of breaching banking covenants and might launch an emergency rights issue.
Debenhams chief executive Rob Templeman said that in the 10 weeks since its interims, comparable store sales had advanced 1 per cent.
He said that Debenhams had continued to gain market share and that gross margin guidance for this year was unchanged within a flat to plus-20 basis point range.
Debenhams said in its update: “The company remains highly cash generative and net debt at year end is expected to be in line with market consensus. No changes have been made to supplier terms outside the ordinary course of business. Progress has been made on de-leveraging the balance sheet.”
Templeman said: “In light of the tough trading environment across the whole UK retail sector, we are pleased with customer response to our new ranges and, as a result, our improving sales performance for the period.”
Shore Capital analyst John Stevenson said: “Debenhams remains highly financially and operationally geared. However, the underlying position appears stable at present, suggesting last week’s stock falls have been overplayed.”
Kaupthing analyst Matthew McEachran said trading fears about Debenhams had been “completely misplaced” and noted: “Unlike most others in the sector this isn’t a profit warning but an extremely solid update.”
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