Sales edge up at Debenhams but it warns of volatility

 
Emma Haslett
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Debenhams said trading had been tough since Easter (Source: Getty)

Sales rose at Debenhams in the 15 weeks to mid-June, but the retailer wasn't all that confident about its outlook.

The figures

In a trading update today, Debenhams said group like-for-like sales rose 0.9 per cent in the 15 weeks to 17 June, or 1.7 per cent in its first three quarters. On a constant currency basis, those figures were 2.4 per cent and 0.7 per cent respectively.

Meanwhile, digital sales rose 7.9 per cent during the quarter, and while gross margin remained the same, cost guidance fell to three per cent.

Food sales rose five per cent, while full-price sales, ie. items that weren't sold at a cut price, rose 1.7 per cent.

Shares were down 2.2 per cent at 43.5p in the first minutes of trading.

Read more: Debenhams considering 10 store closures in turnaround plan as profits fall

Why it's interesting

A year after the Brexit vote, it's clear consumers are having a tough time: this month official figures showed inflation had risen to 2.7 per cent in the year to April, squeezing workers whose pay rose a mere 1.7 per cent.

A day later, the Office for National Statistics (ONS) published figures showing retail sales hit a four-year low in May, with growth dropping to 0.9 per cent. In other words: it's not an easy time to be a retailer.

So it was hardly surprising that today Debenhams, which dropped out of the FTSE 250 last month, said the UK trading environment has been "less predictable" since Easter. Although it said full-year pre-tax profit is likely to be within analysts' expectations, it added that if current market volatility continues, that could fall.

Read more: Debenhams is gearing up to improve its leisure offering

What Debenhams said

Chief executive Sergio Bucher said:

As industry data has confirmed, May was a tough month for retailers and we continue to see volatility in trading week to week. As a result we are focused on delivering cost control and self-help through our "Fix the Basics" plan. We continue to build good foundations for longer term growth at Debenhams by becoming a Destination, Digital and Different.

In short

With real wages falling and consumers tightening their belts, it's no wonder Debenhams laid the groundwork for a tough few months to come.

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