UK: “Good progress” at Debenhams despite FY profit dip
- FY pre-tax profit down 2.7% to GBP154m
- Gross transaction value up 2.5% to GBP2.777bn
- Like-for-like sales up 2%
Department store retailer Debenhams recorded a slight decline in full-year pre-tax profit, but nonetheless made “good progress” in the year, according to one analyst.
Total gross sales rose 2.5% in the year to 31 August, with UK gross sales rising 2.3% to GBP2.255bn and international sales up 3.7% to GBP522m, the company said.
Group like-for-like sales were up 2%, thanks to growth in online and international segments, but the company’s core UK business recorded a comps decline of 2.7%.
Online sales were up 46.2% to GBP366.3m, accounting for 13.2% of group sales, while gross margin was flat.
Debenhams highlighted market share gains in clothing, both in stores and online, quoting a Kantar Worldpanel gain of 20 basis points for clothing, footwear and accessories in the 24 weeks to 1 September.
David Alexander, consultant at Conlumino, said the results constituted “good progress” for the company against a challenging market backdrop.
He added: “While the overall sales picture looks rosy – particularly in online where Debenhams has made some real strides thanks to some concerted efforts to improve its multichannel proposition – underlying these sales figures is a flat group gross margin and a decline in pre-tax profits of 2.7%.”
Debenhams chief executive Michael Sharp said he was pleased with the performance, pointing to the “very difficult” market conditions and gains in market share.
He added: “More widely, whilst consumer confidence may be showing signs of improvement, we expect that household incomes will remain under pressure from inflation growing ahead of wages.
“With this in mind, we remain cautious about the strength and pace of any consumer recovery in 2014 and expect the marketplace to remain highly competitive.”
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