According to Glynn Davis, City and Corportate editor for Retail Bulletin, Debenham's former private equity owners took out £1.3 billion of cash in two re-financings resulting that the company has little head-room to manoeuvre through any downturns in the market. To date this has not been an issue, however with the crucial Christmas period approaching this could all change as there is great uncertainty in the market with many people predicting that shoppers could really start deserting the high street, which could put Debenhams in a very dark place.

Thankfully for its shareholders sales rose five per cent to £2.3 billion for the year to September 1st and profits after tax up 13 per cent on last year to £127.5 million. Like-for-like sales also saw an increase to 2.1 per cent for the seven weeks to October 20.

However, these figures were set against very weak comparatives the previous year with like-for-likes dropping four per cent, so this performance wasn't overly spectacular. In contrast to Debenham's management stating “we are confident that the changes we are making throughout Debenhams are benefiting the business”, it could be that problems are only just beneath the surface. One particularly bad indicator for the future is that even with a fairly benign backdrop - with consumers spending freely - the company has been forced to send out three profits warnings over the past year.

What makes it even more difficult to put a positive spin on the comparatives is that despite potential difficulties on the horizon the group is still pressing ahead with its expansion plans. The company aims to add as much as 1.8 million sq ft of new space to its existing 10.3 million sq ft over the next four years.

Accepted that it is under-represented in some key shopping centres, it seems that a significant level of capital expenditure is continuing to be thrown at new stores when there is a high likelihood of tough times for the foreseeable future.

Image: Debenhams