Debenhams today reported like-for-like sales rose 1.9% in the fourth quarter. Retail Week rounds up the City’s reaction.
“Compelling product, attractively displayed and effectively marketed in-store and online, has ensured a strong close to the year for Debenhams and like-for-like sales have risen 1.9%. Importantly gross margins have also recovered and Debenhams is well placed to continue its market share gains.
“Importantly having cleared excess stocks in February and March, management has delivered a much better gross margin performance over the course of the second half. Whilst both intake margins and mix have helped, we expect that the big change from the first half to the second has been the reduced need to clear unsold product.” - Eithne O’Leary, Oriel Securities
“Despite a relatively dull assessment of the UK clothing market through August by comparable peers recently, such as Next, Debenhams has posted a solid Q4 trading result, growing total clothing/footwear/accessories market share by +30bp in the 12 weeks to 4 August.” – Richard Edwards, Citi
“After the last trading update, in which Debenhams posted rather flat results thanks mostly to the weather, the group is now firmly back on form with a solid set of trading numbers. Admittedly, the weather has, this time around, been a help rather than a hindrance with warm conditions boosting the high street as a whole, but Debenhams still deserves credit for its underlying strategy which is helping it to make good market share gains.
“On the product front, Debenhams’ knack of putting together unique collections from a number of credible designers continues to pay dividends. Being a ‘house of brands’ not only allows it to simultaneously hit customer targets across the age and style spectrum, but also ensures it properly interprets the latest trends and translates them into ‘must have’ high street products.
“Broadly, we remain optimistic about Debenhams. A strong product pipeline as well as the uplifts coming from store refurbishments should help the group make further market share gains as it moves into its new financial year.” - Håkon Helgesen, Conlumino,
“We noted yesterday that, given their recent record with “the weather”, some people feared that the impact of the warm weather in August on autumn clothing sales would offset the boost to trading from the heatwave in July to leave like-for-like sales only flat in the final 10 weeks of Debenhams’ financial year.
“But the outcome was a reasonably pleasing 1.9% like-for-like increase, even if all that and more came from online growth. Despite apparently constant Sale activity and pressure on Distribution costs, there was a modest improvement in gross margin in the fourth quarter and management say that year end August profits will be in line with expectations, whilst progress on the Oxford Street store revamp is on track.” – Nick Bubb, independent