Debenhams sales rise

City A.M. Reporter
Debenhams, Britain's second largest department store group, showed its resilience in the economic downturn by beating forecasts for quarterly underlying sales and winning market share even though it faced a deluge of rain in April.

The firm, ranked second in Britain after employee-owned John Lewis JLP.UL, said on Thursday sales at stores open over a year rose 3.1 per cent, excluding VAT sales tax, in the 16 weeks to June 23, which includes its fiscal third quarter.

That compares with a rise of 0.3 per cent in its first half and analyst forecasts in a range of down 3 percent to up 1 percent.

Debenhams has benefited from a broad width of product choice, a broad church of customers, multiple routes to market and a strategy to drive profits by investing some of its gross margin, through price cuts and promotions, into pushing sales.

The firm, which trades from about 170 stores in the UK, Ireland and Denmark, about 70 franchise stores in 25 international markets and across the Internet, said it now expected gross margin for the full year to be around 30 basis points lower than 2010-11 compared with previous guidance of broadly flat.

"Taking the sales performance, revised gross margin guidance and higher marketing spend into account, we remain comfortable with the market's current expectations for reported profit before tax for the year as a whole," it added.

Debenhams returned to the stock market at 195 pence in 2006 after two and a half years in private equity hands.