Shares in troubled department store Debenhams fell nearly eight per cent in mid-morning trading, despite figures published this morning suggesting it had a record Christmas. The retailer said like-for-like sales in the four weeks to 10 January rose 4.9 per cent. Particularly successful were online sales, which went up by 29 per cent. Demand for Click & Collect peaked at 38 per cent of online orders in the immediate approach to Christmas.
However, sales for the 19 weeks to 10 January fell 0.8 per cent, missing analysts' expectations of growth of one per cent.
Why it's interesting
The department store has faced increasing competition from rivals such as House of Fraser and John Lewis over recent years – in October last year, Debenhams reported a 20 per cent fall in full-year pre-tax profits.
But investors shouldn't disregard those Christmas trading figures. The retailer didn't issue a profit warning at the end of last year, despite whispers in the City suggesting it might. After all, just before Christmas 2013, shares fell more than 12 per cent after it warned first-half profits had been hit by discounting.
And let's not forget Mike Ashley's interest in the group. In November last year, the Sports Direct founder converted his - or, rather, his company's - 4.6 per cent stake in the business into a put option worth 6.1 per cent, much to shareholders' chagrin.
They shouldn't be disheartened. In the long term, its performance over Christmas may reflect a change in fortune for Debenhams, but the fact its biggest rival – House of Fraser – also had a very good Christmas indicates it might be nothing more than a symptom of the festive season.
What Debenhams said
Chief executive Michael Sharp is positive about the future:
I am pleased with our performance in the critical Christmas trading weeks, driven by our strength in a diverse range of product categories and a strong marketing campaign focussed on gifting.We continue to focus on building stable and sustainable profit growth and have made good progress on the five priorities we set out last year.
Debenhams is having a tough time keeping up with its department store rivals. This has been concerning shareholders, but its performance over Christmas indicates it is still very much in the game.