 Warmer weather and aggressive discounts helped the second largest UK department stores to post better than expected performance in the underlying sales over the last 18 weeks. Group like-for-like sales for the five weeks to 31 December
increased a 6.5% including VAT.
“Overall, we are pleased with this good performance given the difficult trading conditions which have been experienced during the period. Warmer weather throughout October and November impacted the sales of seasonal product lines and uncertainty in the wider economy continues to have an adverse impact on consumer confidence. December trading was notably stronger with growth in Group like-for-like sales for the five weeks to 31 December of 6.5% including VAT,” company said in a statement released on Tuesday.
Debenhams recognised that sales at stores open over a year, excluding VAT sales tax, were flat in the 18 weeks to January 7. This compared with analysts’ forecasts of sales down 0.9% from a range of flat to down 3.2 per cent, according to a Reuters poll of nine.
But part of this increase is also explained by the Debenhams’ slashed prices by up to 40 per cent in a week-long promotion in November and was considered by analysts to be one of the most aggressive discounters in the seasonal period.
Group gross transaction value for the 18 weeks to 7 January 2012 increased by 0.5%. Group like-for-like sales increased by 1.4% including VAT and were level with last year excluding VAT. The online business, which is a key component of our multi-channel offer, delivered another strong performance with like-for-like sales increasing by 34.8%. With regards to the year ahead, Debenhams advanced that “at this stage, gross margin guidance for the financial year is unchanged at flat.”
However, Michael Sharp, Chief Executive of Debenhams, showed his content with the outcomes: "I am pleased with this performance. We traded well despite the difficult environment as evidenced by strong sales in December, including record sales in the final week before Christmas. Looking forward, we are cautious about the strength of the economy and its impact on consumer behaviour over the remainder of the financial year. We will continue to manage the business tightly with an ongoing emphasis on cost and margin management. We are confident that the design, quality and value offered by our spring/summer 2012 product ranges will find favour with customers and expect to see some benefit from lower input prices in the second half of the year."
Following Reuters’ data, shares jumped 8 per cent after investors expressed relief at the trading performance, which compared with some forecasts for a decline of up to 2 per cent.
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