Debenhams said its turnaround strategy is bearing fruit after like-for-like sales edged up as it launches Sports Direct and Costa coffee concessions in store.
The retailer, which issued a profit warning at the start of the year, said that like-for-likes inched up 0.7% in the 14 weeks to June 7. The rise followed the retailer’s decision to change its promotional strategy to deliver more full-price sales.
Debenhams is also trialling Sports Direct and Costa coffee shop concessions in a selection of stores. The Sports Direct trial will launch in Debenhams’ Harrow and Southsea stores in August.
It follows talks between the pair stimulated by the sportswear giant’s acquisition of a 4.6% of Debenhams shares in January, which it swiftly sold and exchanged for an option on a larger 6.6% stake.
Debenhams will also trial six Costa concession, with the first opening next week in Guildford.
Although Debenhams was formally reporting a 15-week period to June 14, during which there was a like-for-like decline of 1%, it said the 14 weeks were more representative because of a change of timing of this year’s summer Sale.
Debenhams’ group gross transaction value rose 1.6% over 14 weeks and was flat over the longer period.
Debenhams’ online sales growth rate slowed to 10% over 14 weeks, which the retailer said reflected the number of promotions last year as it cleared excess stock. Online revenues accounted for 15.2% of total sales.
Debenhams chief executive Michael Sharp said: “In April we set out five priorities to address the challenges that Debenhams faced in the first half of the year.
“Our performance in the second half reflects the work we have done, particularly to refocus our promotional activity.
“Although early days, this strategy is delivering higher full-price sales and we expect to see the benefit through gross margin progression in the second half of the year and in 2015.
“Looking forward, whilst it is clear that consumers are aware of improvements in economic indicators, they are not yet seeing a significant improvement in their disposable income. Our outlook for the full year remains unchanged.”
Debenhams also revealed plans for a £200m bond issue. Proceeds will be partly used to pre-pay existing credit facilities.