Debenhams surprised the City by delivering a Christmas 3.7% like-for-like gain despite difficult high street trading. Here’s the reaction.

“Historically when the high street has suffered Debenhams has reflected this.

“This year execution has been outstanding, with materially lower reliance on outerwear and clothing in general and much stronger full price sell through. The online peak lasted longer, with greater customer confidence in the next-day home delivery and click-and-collect offer.

“This strong Debenhams performance paints M&S in a much poorer light.” – John Stevenson and Jonathan Pritchard, Peel Hunt

“The market had been pricing a lot of negativity into today’s update on the back of difficult trading conditions in the run up to Christmas and evidence of weak trading amongst its large (and small) peers.

“Historically Debenhams didn’t have the flexibility in the cost line versus the likes of M&S and Next. This meant increased dependency on like-for-like sales and margin performance.

“Today’s update is both positive in absolute terms and substantially better than the bears would have feared, putting the group on track to deliver full year profit before tax expectations, albeit these edged down in recent weeks. This performance confirms traction is increasing in the strategy.” – Matthew Eachran, N+1 Singer

“A relief bounce was expected today with Debenhams having a better Christmas than predicted. Sales were ahead of expectations and gross margin on track with full year guidance. International and new space are expected to have been the main drivers.

“While Debenhams valuation is undemanding, we remain sceptical about the ability of a new chief executive to achieve sustainable growth and believe the business remains structurally challenged.” – Kate Calvert, Investec

“The high street was a tough place for fashion retailing at Christmas but today’s long-awaited trading update from Debenhams isn’t as disappointing as many had feared, with like-for-like sales up 3.7% over the past nine weeks, even though online was up only 15%.

“Debenhams claims that it had less discounting and a lower level of promotional activity. Interestingly, the retailer also noted “a planned reduction in stock levels across clothing, particularly in weather-sensitive categories” and that clothing was now only 45% of total sales, with beauty and gifts doing well.” – Nick Bubb, independent analyst

“Debenhams guarded itself against the perils of the warm weather during December, learning from last year’s challenges during the same period and tackling them with more success than competitors Marks & Spencer and Next.

“While Debenhams could not resist the lure of promotions in the run up to the festive season, a reduction in the stock levels across clothing – particularly high margin, weather-sensitive categories – enabled the department store to enter the post-Christmas period with less discounted stock compared to the same period last year.

“Careful planning meant that Black Friday fell within its existing promotional calendar, during Megaweek, enabling like-for-likes to be managed rationally and achieve respectable growth against comparable promotional weeks.

“Consistency in its promotional calendar averted the impact of the habitual detrimental boom and fall in sales over the Black Friday period, which many high street retailers are still learning to manage.

“By unlocking the true potential of its online operations and implementing strategic range planning, Debenhams remains on track to deliver profits in line with market expectations in its full year, confirming that discounting both pre- and post-Christmas has not eaten into its margins.” – Rebecca Marks, Conlumino