Debenhams has revealed a strong start to its second half after notching up a 10.7 per cent rise in first-half pre-tax profits.
In the 26 weeks to February 28, headline profit before tax – excluding a non-cash debt fee write-off of £2m – was up 10.7 per cent at £104.2m.
Sales rose 0.3 per cent to £1.3bn and margins grew by 10 basis points. Like-for-likes for the period fell 3.6 per cent. EBITDA was up 6.7 per cent to £183.4m.
In the seven weeks since the end of the first half, like-for-likes have grown 1.9 per cent on sales up 6.1 per cent.
Higher profit margins in the first half were helped by strong demand for its Designers at Debenhams range, said the retailer. Sales of the range grew 11 per cent. Sales of own bought products – which accounted for 75.6 per cent of total sales in the first half - grew 4.4 per cent while concessions sales fell 11.8 per cent.
Over the next 12 months the retailer, which has 154 stores in the UK, said it will convert 450,000 sq ft of trading space from concessions to own-bought.
Net debt at the end of the first half was £927.2m, an improvement of £66.8m on its position at the year-end. Debenhams said that it will focus on taking debt “off the agenda” and will meet a £100m amortisation payment due in May.
Debenhams has seen a bounce-back in shares after a string of robust trading updates. Speculation still remains over whether it will undergo a rights issue.
Debenhams chief executive Rob Templeman said: “The increase in profitability in the first half is a considerable achievement, given the difficult trading conditions across the retail sector, and reflects our commitment to producing stylish, quality products at exceptional value as well as a continuing focus on the levers that drive cash margin.”
He added that he remained cautious about the outlook for consumer confidence in the remainder of the year and would focus on cash profit.