Promotions boost Debenhams profits

DEPARTMENT store Debenhams said it was forecasting higher-than-expected profits after a summer of discounts and promotions helped boost its market share.

DEPARTMENT store Debenhams said it was forecasting higher-than-expected profits after a summer of discounts and promotions helped boost its market share.

The group, which has 169 stores in the UK, Ireland and Denmark, reported top-line growth of 0.4% on a like-for-like basis in the nine weeks to August 27 against a fall of 0.4% over the previous 43 weeks.

During the period, Debenhams started its summer sale five days early to steal a march on competitors, helping it enter the autumn season with low stock levels.

The group said gross margin for the full-year may be slightly down as a result of discounting and competitive pricing.

But it said the additional sales generated will help push profits for the year above City expectations of a 5% increase to £158m.

The strategy helped the chain boost its market share of clothing and premium health and beauty.

The group did not provide sales figures for the UK business, but said its Magasin du Nord chain in Denmark lifted sales by 4.8% – indicating that the UK performance may have been weaker.

Chief executive Michael Sharp, who stepped up from the deputy’s position three weeks ago, said the group had also kept its prices competitive while also running special offers and sales.

He said: “It’s not just about starting the sale early. Customers are liking what we are doing and our Designers at Debenhams ranges.

“There will be winners and losers and we think we are well positioned to be one of the winners.”

Its “Spectacular” promotions, where it drops prices by up to 25% across the store, have also proved increasingly popular in recent months, he added.

The company’s profits have been boosted in recent years by its focus on selling its own label and Designers at Debenhams ranges by the likes of Jasper Conran and Henry Holland.

 

Journalists

Doug Thomson
Huddersfield Town correspondent
Chris Roberts
Huddersfield Giants correspondent
Louise Cooper
Crime correspondent
Nick Lavigueur
Health Correspondent
Joanne Douglas
Local Government Correspondent
Linda Whitwam
Education Correspondent
Henryk Zientek
Business Correspondent
Val Javin
Features Editor
Martin Shaw
Mirfield Correspondent