Debenhams sales up against the odds
Tuesday, 18 September 2012
'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,' said chief executive Michael Sharp. With this statement, Debenhams’ CEO unveiled a 3.7
percent hike in like-for-like sales excluding VAT in the 10 weeks to September 1, and online growth of 40 per cent.As
Reuters reminded Tuesday, analysts forecast a pre-tax profit of about 156million pounds in the 2011-12 financial year.Shares in Debenhams were down 0.32p at 99.13p in early trading Tuesday. So far, the company held its half-year dividend at 1p a share when it reported interim results last April. Shares in Debenhams, up 77 percent over the last year.
“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,” summarised for ‘This is Money’ Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.
“Investors have certainly been rewarded by the company’s success, with the shares having risen 67 per cent over the last year, as compared to a 16 per cent gain for the wider FTSE 250,” he added.
Commenting the news, James McGregor, director of the retail consultancy Retail Remedy, pointed out that “In the current climate, such modest growth looks almost masterful. “To have piled on like-for-like sales, especially in the face of this summer’s retail slump, is a solid achievement, even if it has come at the expense of margin.
“However, much of the extra sales have been delivered through promotional activity and discounting. This tried and tested approach clearly works in the short term, but it cannot be sustainable. In the longer term, Debenhams must focus on customer retention through brand loyalty rather than customer attraction to promotional pricing.”
Sharp added: "The new financial year is all about what we do to make a difference. We can't rely upon any benefit coming from the economy because there's no clear signs yet of any form of improvement."
“Debenhams’ much-needed investment programme, in both its bricks and mortar stores and its online platform, should make it a stronger player in a market that is being continually squeezed both by poor consumer confidence and widespread discounting.”
