DEBENHAMS chief executive Michael Sharp is banking on a stronger second half after miserable weather at the start of the year dented profits in the first six months.
Britain’s second biggest department store group behind John Lewis yesterday posted a 5.4 per cent fall in pre-tax profits to £120.3m for the half year to 2 March, in line with guidance after a surprise profit warning in March.
Sharp said: “We made progress during the first half although snow in late January meant we did not achieve the profit outcome we had expected.”
The retailer stepped up promotions and discounts for Valentine’s Day and the half-term break but failed to fully make up turnover lost to the snow, which kept shoppers away from its stores.
Some analysts have voiced concerns that Debenhams risks damaging its brand with aggressive price discounts – which Sharp denied.
“It also doesn’t do any damage to our ability to trade or the financial performance of Debenhams. It’s undoubtedly a strength,” he said, adding that the firm had relied on promotions for over 30 years.
Total sales at Debenhams, which owns 155 UK stores, the Danish Magasin Du Nord department store group as well as 79 overseas shops and franchises, rose 3.5 per cent to £1.54bn. Like-for-like sales increased 3.1 per cent, but gross margin fell 20 basis points, reflecting a rise in price discounts.
Sharp was more upbeat on prospects for the second half, saying he expected to make further progress “despite consumer sentiment remaining weak”.
Shares, which have fallen 15 per cent since the profit warning, closed five per cent higher at 84.45p.