Holidays help bring sales joy to Debenhams

Kasmira Jefford
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DEBENHAMS posted better-than-expected sales yesterday after events such as the Diamond Jubilee and the Easter bank holiday helped lure shoppers through its doors despite the wet spring weather.

Britain’s second-largest department store group after John Lewis said that sales at stores open more than a year rose 3.1 per cent, excluding VAT, in the 16 weeks to 23 June.

That compares with a rise of 0.3 per cent in its first half and analysts’ forecasts that ranged from a three per cent fall to a one per cent rise.

Chief executive Michael Sharp said key calendar events such as the Jubilee and Mother’s Day were becoming increasingly important as customers focus their spending around those occasions.

“I have seen more of a shift towards that in the past six months than I have seen previously. Some of that is to do with tightening budgets at home and obviously consumer sentiment”, he told City A.M.

The retailer, which has 165 stores in the UK and Ireland, said sales of beauty and homeware products helped offset the impact of the cold, wet spring on demand for seasonal clothing.

But smaller margins on these goods has prompted Debenhams to lower its gross margin guidance for the full year by 30 basis points, which Sharp said yesterday “was not a drama”.

“It would be a concern if the margin deterioration had been driven by an increase in discounting or mark downs but it hasn’t. It has been driven through a mix change and our desire to grow our non-clothing categories.”

Online sales grew by 34.9 per cent, driven in part by its so-called endless aisle technology launched in October that allows shoppers to buy stock from an online stockroom as well as in stores. Sharp said 60 per cent of sales made online “were incremental” and not “cannibalising” its bricks-and-mortar business.

“We know that people who shop multi-channel spend three times more than those who just shop online...the key is to get people to shop across more channels,” he said.