Debenhams profit surges by 20pc

Debenhams met expectations with a 21 per cent rise in year profit and predicted more growth in 2010-11 as it benefits from a shift to higher margin own-bought products.

Debenhams, with 167 stores in Britain, Ireland and Denmark, and 60 franchised outlets in 23 countries said it expected to resume dividend payments when it publishes interim results.

"Although we remain concerned about the general retail environment, we are encouraged by the start to the new financial year which has seen positive like-for-like sales and gross margin in the early weeks," said chief executive Rob Templeman.

Profit before tax and one-off items rose to £151m in the year to 28 August, in line with company guidance, from £125.2m in 2008-09.

Debenhams, number two to employee-owned department store group John Lewis by sales, said revenue increased 9.6 percent to £2.56bn, as the firm won market share in menswear and childrenswear.

Sales at stores open at least a year were flat compared with the previous 12-month period, while gross profit margins were up 70 basis points as the firm moved over 530,000 square feet of trading space from concessions to own bought products.

Debenhams ended the period with net debt of £516.8m, down £73.5m from a year ago.