Christmas came too late to help Debenhams
DEBENHAMS posted an unexpected fall in first-quarter sales yesterday as a strong Christmas failed to undo the damage of mild autumn weather.
Britain’s number two department store chain said that UK like-for-like sales for the 19 weeks to 10 January fell 0.8 per cent, below analyst expectations for a one per cent rise, as demand for winter clothing suffered from the unseasonal weather.
The firm also warned that weaker clothing demand and higher sales of low-margin categories meant a full-year rise in gross margin would be at the lower end of its 0.1-0.4 percentage point forecast.
Investec’s Kate Calvert trimmed her full-year pre-tax profit estimate by £1.6m to £111.7m. And Cantor Fitzgerald analyst Freddie George, retaining his “hold” rating on Debenhams shares, said: “We remain concerned that the department stores are capital intensive and need to be furbished to a higher standard to attract shoppers.”
One bright spot was a strong improvement in Christmas trading, with underlying sales up 4.9 per cent over the four weeks to 10 January.
After a dire Christmas in 2013, when it was forced to issue a profit warning after discounts failed to boost sales, Debenhams moved to manage stock better, cut promotions and improve online ordering and delivery in 2014.
Online sales grew 28.9 per cent over the four weeks to 10 January, helped by an improved website, the introduction of a next day click-and-collect offering, and a 10pm cut-off for next evening delivery.
Shares in the company closed down 6.73 per cent at 70p.