Debenhams sales up

City A.M. Reporter
Debenhams, Britain's second largest department store group, showed its resilience in tough markets with an improving sales performance in its first half.

The firm, which trades from 167 stores in the UK, Ireland and Denmark and over 60 franchise stores in 24 international markets, said on Tuesday sales at stores open over a year rose 0.3 percent, excluding VAT sales tax, in the 26 weeks to 3 March.

That was ahead of analysts' average forecast of a fall of 0.2 per cent, according to a company poll, and flat sales in the 18 weeks to 7 January.

The firm said it had a good finish to the half with like-for-like sales up 2.4 per cent in the last eight weeks.

"Trading in the last eight weeks of the half held up well, helped by a successful winter sale as well as an encouraging start to the new season," it said.

Britain's retailers are mostly struggling as disposable incomes have been squeezed by rising prices, muted wages growth and government austerity measures, and shoppers fret about rising unemployment, a shaky housing market and the euro zone debt crisis.

Debenhams, with its wide range of products, has fared better than most.

The strategy of the firm, ranked second in the UK after employee-owned department store chain John Lewis, is to drive profits by investing some of its gross margin, through price cuts and promotions, into pushing sales.

Prior to the update analysts were forecasting a first half underlying pre-tax profit of £114-£140m.