Debenhams exceeds profits forecasts
Debenhams, which is Britain’s second largest department store after John Lewis, has today exceeded market expectations after reporting growth of 0.4% in the nine week period to the end of August on a like-for-like basis.
The retailing giant said aggressive summer discounting and promotions had helped increase its market share.
The company said growth came from its Danish subsidiary, Magasin du Nord, acquired two years ago, while the company has benefited from strong online sales throughout the year.
Chief executive Michael Sharp said helping to keep prices competitive had helped.
He said: “It’s not just about starting the sale early. Customers are liking what we are doing and our Designers at Debenhams ranges.
“There will be winners and losers and we think we are well positioned to be one of the winners.”
The news was well received by the market after shares in the company increased 3.5% in early trading today – outperforming the rest of the market.
In the meantime, the retailer said it has leased 145,000 sq ft at the Regent’s Place office, located near Regent’s Park, for 25 years, for its new headquarters.
The site is currently under development and completion is expected in the summer of 2013.
However, the figures come at a time when the British high street is struggling. Last week, the Office for National Statistics (ONS) revealed UK retail sales fell by 0.2% in August.
Households continue to be squeezed by higher inflation, rising unemployment and sluggish wage growth and this is affecting retailers.
Also last week, the John Lewis Partnership, which is regarded as a barometer of British retailing, reported a marginal increase in sales and said trading conditions are “extremely challenging”.
The renowned employee-owned chain, which owns the Waitrose supermarket chain, said sales rose 1% on a like-for-like basis in the six month period to 30 July.
However, across the group, first-half pre-tax profits slumped by 18% to £90.4 million.