Retailer bucks the trend with sales rise

City Editor

Wednesday 19 September 2012

DEPARTMENT store chain Debenhams has outstripped key rivals by posting accelerating sales growth when others saw a drop-off over the summer.

BUOYANT: Debenhams now has 16 stores in Scotland after opening in Dumfries this year. Picture: Colin Mearns

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TIM SHARP CITY EDITOR

Debenhams, which has 16 stores in Scotland after opening in Dumfries this year, said like-for-like sales excluding VAT, rose 3.7% in the final 10 weeks of its financial year to September 1.

This was an acceleration on the 3.1% growth posted for 16 weeks to June 23.

But investors reacted in muted fashion after the company failed to upgrade profit forecasts. The UK's second largest department store group after John Lewis said it would meet expectations of a pre-tax profit of around £156 million for the year, having posted earnings of £152m last year.Chief executive Michael Sharp said: "I am delighted with our strong performance and the progress we have made in 2012. "To deliver like-for-like sales growth in these extremely challenging market conditions is highly creditable and we achieved this result by relentlessly focusing on our customers. "This performance is clear confirmation that our strategy to build a leading international, multi-channel brand is beginning to work. We do not anticipate a significant change in the economic environment in the near future but we expect to continue to make progress in 2013."The high street has been hit by a squeeze on shoppers' income between muted wage growth and rising prices for key items such as fuel. Last week, retailer Next said it found August and September disappointing.Marks & Spencer also reported losing market share in the key womenswear sector earlier this year.Debenhams, by contrast, is winning shares in womenswear and is reportedly maintaining its share elsewhere.Mr Sharp said the company, which has 167 stores in Britain, Ireland and Denmark and more than 60 international franchise stores, had not seen a slowdown in August.He said he expected Debenhams to continue to deliver like-for-like sales growth in its new financial year and said he was encouraged by the start to the autumn/winter season.Debenhams' shares closed flat at 99.45p as the company failed to upgrade profit expectations.Analysts said some of its sales gains had come at the expense of profit margins while the company is also investing profits in upgrading its internet shopping infrastructure to compete with the likes of Next, which has a long history in home shopping. Debenhams said its online sales grew by 40% over the year compared with around 13% for the market as a whole. Richard Hunter, head of equities at stockbroker Hargreaves Lansdown, said: "The overall strategy is similar to many of its rivals in what remains a fiercely competitive environment and, along with the ongoing economic malaise, Debenhams will need to be at the top of its game as time progresses."

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Retailer bucks the trend with sales rise

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