Debenhams looks at expansion

Debenhams, which could be set for a return to the stock market with a flotation valuing it at more than £3 billion, is considering stepping up ambitious expansion plans.

The department store chain last week invited four banks to canvass investors to see if there is an appetite for a float. Now, if the plans go ahead, it could be set to double its size. According to a company source, chief executive Rob Templeman believes the main chain has the potential to be twice its current size of 120 stores, and the new 'Desire' format - a smaller store aimed at women - has also been earmarked for up to 130 market towns.

Debenhams might return to stock market

Department store chain Debenhams is contemplating a return to the stock market and has asked four banks to prepare proposals. The deal could be worth £3 billion or more.

Investment banks Merrill Lynch, Morgan Stanley, Credit Suisse and Cititgroup have issued proposals, reports the Financial Times. They were the four that handled the £1.9 billion refinancing of Debenhams.

Debenhams could chose to remain privately-held and opt for another refinancing, however, if the company does go public, it will be the London stock market's biggest deal this year.

Debenhams is owned by a consortium of private equity groups. TPG, CVC and Merrill Lynch Private Equity acquired the chain in 2003 for £1.9 billion and invested £600 million of equity in the company. Since then the consortium has received repayments of about £1.3 billion, more than double the original combined investment.

www.debenhams.co.uk
19 January 2006

Debenhams to refresh lingerie department

Department store Debenhams is rethinking its lingerie areas for next season, to refresh the focus on function and shapewear.

Head of lingerie Susie Calvert told Drapers the department store group was taking a more functional approach to its offer to guide customers on solution dressing. A 20 store trial of the new format is already underway.

Calvert further said: "we are using the same amount of space, between 800sq ft and 1000sq ft, but will have separate sections according to function. There are areas for smooth-look, cleavage-enhancing and everyday pieces, and also areas selling more glamorous designs and a fuller bust shop."

The move is mirroring a trend in lingerie toward smoother silhouettes. The strategy will also mean Debenhams' branded offer, including the likes of Triumph and Lepel, will be mixed into the different areas rather than selling from a dedicated space. Its own-label Red Herring lingerie is also relaunching with reduced entry price points.

Debenhams to consider flotation

High street retailer Debenhams is considering the possibility of returning to the stock market with a price tag of over £3 billion as early as this spring. The company recently reported that profits doubled last year.
If Debenham', which is headed by Rob Templeman, decides to go ahead, he and 200 managers, including the multi-billionaire private equity baron John Lovering, who is chairman, stand to collect around £300 million.

Floating Debenhams would yield a huge return for the private equity groups - CVC, Texas Pacific and Merrill Lynch Global private equity - that paid £1.9bn to take the company private in 2003.
Industry sources say that an announcement could come after Debenhams reveals its interim figures in February, but a decision is contingent on stock market conditions at the time.
Although the retail sector faces a tough trading environment, it is possible Templeman will be able to convince the City that buying shares in Debenhams is a great way to exploit a possible return of consumer confidence in late 2006, assuming that interest rates are cut.

Templeman has boosted margins and sales by squeezing suppliers and by successfully expanding the new smaller format, Desire, with plans to launch more of the stores abroad over the next two years. Debenhams has also launched its new Designers line.
Some City analysts say that a float in 2006 is a racing certainty as there are doubts about whether Debenhams can continue its momentum into 2007 and beyond. The £3bn price tag will surprise some in the City, who believe that the target is too ambitious.
The sales growth - coupled with an improvement in the operating margin - helped Debenhams lift pre-tax profits by 123 per cent to £238.6m, on the back of a 10 per cent rise in sales to £2.09bn.

www.debenhams.co.uk
28 November 2005

Debenhams breaks £2bn sales barrier

British department store chain Debenhams broke the £2 billion sales barrier last week and reported profits had more than doubled. Herewith the chain took market share from other department stores like Marks and Spencer, reports the FT.

Privately-held Debenhams - the chain went private in 2003 - does not have any plans to return to the stock market yet. Chief executive Rob Templeman: "There are no plans and nothing on the starting blocks at all. It doesn't mean we are ruling it out for next year." He said that the chain was "in good shape", despite a slack consumer market. "We will take more than our share as we go into Christmas," he said.

Although Templeman refused to comment on current trading, he said that underlying sales for the year ended 3 September had risen 2.8 percent. He also added, however, that underlying sales had decreased to 0.6 percent in August, indicating that even Debenhams is susceptible to the tough trading conditions on the high street.

Despite a difficult retail environment, Debenhams has managed to gain market share. In 2005 it reached 18.6 percent, compared with 16.4 percent last year, thereby surpassing John Lewis with 18.1 percent.

Pre-tax profits leapt 123 percent to £238.6 million on sales up 10 percent to £2.09 billion. The company generated cash of £248 million for the year. Net debt more than doubled to £1.87 billion following the £1.9 billion refinancing it received last year. The chain has managed to repay £1.3 billion - twice the amount of the original investment - to its private equity investors Texas Pacific, CVC Capital and Merrill Lynch Private Equity.

The company has spent £105 million on store refurbishments and new stores and plans on spending about £115 million this year. There are plans to roll out 130 of its "Desire at Debenhams" stores, of which it has opened two in the past year. Meanwhile, the company believes it can double the number of department stores in the UK to 240.

www.debenhams.co.uk
14 November 2005

Debenhams rules out float

The chief executive of British department store chain Debenhams, Rob Templeman, has categorically stated that the chain will not go public this year. However, he did not rule out the possibility of a float next year, reports the FT.
Despite tough trading in the past few months, Debenhams saw underlying sales in the first half ended August increase by more than 2 percent.

The previous six months saw a stronger performance with a rise in like-for-like sales of 4.2 percent. Templeman indicated that September had been a tough month.
With a trading update coming up in November, Templeman said that while sales growth was "getting tighter", margins had improved. He added that the chain would provide "good profit increases for the year".
The refurbishment of the chain's Oxford Street store in London, which has cost the company £8 million, has been completed, said Templeman. The endeavour has added 36,000 square feet to the store.
Debenhams is planning a catwalk show outside the store on Saturday in an effort to lure consumers back to the West End, following the July terrorist bombings.

Templeman plans to add 45 department stores to the existing 119 stores in the Debenhams stable. The ultimate goal is 240 stores within the next five years.
Earlier in the year, Debenhams completed a £2 billion refinancing. It was the second time since private equity firms Texas Pacific, CVC Capital and Merrill Lynch Private Equity took over the chain for £1.9 billion at the end of 2003.
Debenhams has already made capital repayments of approximately £1.2 billion, twice the amount of the combined equity investment of £600 million that the three parties made.
Templeman is also rolling out Debenhams Desire stores - smaller exclusively women's wear concepts - across high streets in the UK. He believes that there is a possibility of opening 150 Debenham Desire stores.

www.debenhams.co.uk
28 September 2005

Debenhams further reviews float

Debenhams private equity backers are considering floating the department store group as early as the final quarter of this year and are reviewing preliminary plans to assess the feasibility of an initial public offering. "We want the flexibility. The IPO window opens and shuts and we want to be in a position to float when the market allows," one of Debenhams' owners said. Debenhams declined to comment.

Any Debenhams offering could fall victim to weakness on the high street and jittery conditions in the IPO market. However, the retailer has proved one of the high street's most resilient performers. Like for like sales rose 4.2 per cent in the six months ended February and debt investors were told of an even better performance in the second half.

2 August 2005

Debenhams considers flotation

The private equity backers of Debenhams, the British department store group, are considering floating the group in the last quarter of this year and are currently examining the viability of an initial public offering. "We want the flexibility. The IPO window opens and shuts and we want to be in a position to float when the market allows," one of the owners told the FT.

The group, which declined to comment, has recenly completed a £2 billion refinancing. The Debenhams group is now valued at about £2.1 billion. The group's owners, Texas Pacific, CVC Capital and Merrill Lynch Private Equity acquired the group in 2003 for £1.9 billion and have since received capital repayments of about £1.2 billion from Debenhams, twice their combined equity investment of £600 million. Debenhams is the UK 's second largest department store group. Chairman John Lovering, chief executive Rob Templeman and executive director Chris Woodhouse have worked together on a number of successful buy-outs, which include Homebase, Halfords and Odeon Cinemas.

Although the market is currently volatile due to weak performance on the high street, Debenhams has proved to be one of the high street's best performers. In the six months ended February, like-for-like sales rose 4.2 percent. CEO Templeman has indicated that the group has generated so much cash that it could easily undergo another refinancing, making that the third since the group was purchased in 2003. With the news that CVC Capital had closed Europe 's biggest buy-out fund at €6 billion last Friday, news of a possible IPO for Debenhams also emerged. CVC chairman Michael Smith would not, however, reveal information about the timing of a potential IPO.

www.debenhams.co.uk
1 August 2005

Debenhams Loses Credit Card Appeal

Government wins an appeal against a credit card scheme used by high street stores that could have cost the Treasury millions of pounds a year in lost VAT. The Treasury brought the case against Debenhams after the company began using a scheme where it asked customers using a credit or debit card to pay a card-handling fee, 2.5pc of the purchase price, to a subsidiary company, Debenhams Card Handling Services.

High Court judge Mr Justice Lindsay overturned the tribunal's decision in June last year. HM Customs appealed, and yesterday the Court of Appeal reinstated the decision on the grounds that Debenhams is responsible for paying VAT on 100pc of any money paid by a customer. Under the old scheme Debenhams only had to pay VAT on 97.5pc of the full price. An independent tax tribunal ruled against the scheme in 2003 when it was estimated that 70 retailers would use the scheme by 2004 at an annual cost of £300m to the taxman.

www.debenhams.com
19 July 2005

Debenhams may bid for Beatties

Debenhams is said to be considering a counter-bid for Beatties, one of Britains' oldest department store groups. Private equity- backed Debenhams is considering a counter-bid to HoF for the 12 store Beatties group. Early last week, HoF chief executive John Coleman announced his agreed move for Beatties as part of an ambitious expansion plan.

He paid £46 million for Edinburgh store Jenners in March. Debenhams, led by Rob Templeman,refused to comment, but a source close to the group confirmed 'it was seriously looking into it'.

www.debenhams.com
3 July 2005

Debenhams Holds Back on Flotation

Debenhams has ruled out an early return to the stock market as it continues to outperform the sluggish retail sector. Debenhams has reported comparative sales growth at its 116 outlets of 2.7 per cent during the 13 weeks to the end of February. Half-year trading profits were up 64 per cent to £152m. CVC Capital Partners, Texas Pacific Group and Merrill Lynch Global Private Equity chain, the three private equity owners who backed Debenhams' £1.7bn buyout in 2003, are apparently in no hurry to recoup their investment, despite speculation that a float is on the agenda.

Chief executive Rob Templeman said: "Debenhams has done so well since we bought it that we can now look at all the options. There are no plans for an IPO."

Templeman told journalists the chain has taken share from rivals including Next and Marks & Spencer, with the Designers at Debenhams ranges performing particularly well. He said: "We have the right product and the right marketing. Consumers are more brand- and designer-conscious than they have ever been."Designers Betty Jackson and Nigel Cabourn have joined the range.

The group revealed that it paid £34m for the eight Allders stores acquired from the administrators in February, with another £18m is to be spent rebranding the stores.

www.debenhams.com
6 April 2005

Debenhams In Allders Chain Revamp

High street department group Debenhams says it is continuing to take market share from rival retailers and plans to spend £18m revamping eight outlets bought from the collapsed Allders chain, according to the Evening Standard. Second-quarter results from Debenhams today show it is continuing to push underlying sales ahead, with a 2.7% gain in like-for-like turnover in the 13 weeks to 26 February. This is a slowdown from the 6% gain reported in the first quarter, but leaves the first-half figure at 4.2%, ahead of many of its retail rivals.

Trading profits for the six months to the end of February jumped by 64% to £152.2m, while there was a 270% surge at the pre tax level, to £162.2m. The privately-owned group said growth came across all product categories, with the Designers at Debenhams ranges performing particularly well.

Chief executive Rob Templeman said: 'We are encouraged by the positive customer reaction as Debenhams continues to invest in quality products, people, and stores while offering exclusive and stylish Designers at Debenhams brands at affordable prices. 'All of this reinforces the confidence we have in the trading and growth potential of Debenhams as we continue to increase market share.' Total sales for the second quarter rose by 5.7% to £594.8m, taking the first-half figure to £1.11bn, an increase of 6.7%. There were further improvements in supplier costs and a continued reduction in costs, pushing margins ahead by 3.6%.

The group, taken private after a fierce takeover battle in late 2003, has 116 stores, including the Allders outlets and a new store in Cork, and said it plans to step up its expansion. It has a target of 240 outlets. Its store refits are continuing to generate good returns, Templeman said.

www.debenhams.com
5 April 2005

Debenhams back to stockmarket?

According to a report in the Mail on Sunday, the British department store chain Debenhams plc is considering returning to the stockmarket. At the end of 2003, Debenhams went private after what turned out to be drawn-out GBP 1.7 billion takeover battle.

Rumour has it that the company's management is meeting with several banks over the next few weeks to discuss and negotiate a possible return to public ownership.

Most retailers have suffered poor sales since Christmas. Last November retail consultancy company Verdict published a report that revealed that UK department stores are losing out in the clothing market department to supermarkets and specialised retailers as places to buy clothes from.

www.debenhams.com
8 March 2005

Debenhams may undertake sale to pay debt

Debenhams hopes to undertake a £500m sale and leaseback on its 23 freehold properties, which includes its flagship Oxford Street store, to pay down more debt.

Rob Templeman, chief executive, re-mortgaged the 23 freehold stores at the time of the takeover to raise capital to refinance an expensive bridging loan. It is now thought that Templeman wants to use the proceeds of a sale and leaseback to pay down that mortgage debt and raise potentially extra funds for the department store chain.

The current management team at Littlewoods is mulling whether or not to make its own offer for the 186-strong store chain after it emerged last week that the Barclay brothers were considering selling the stores. "A management offer could be an option but there haven't even been preliminary talks with backers yet," said one person familiar with the situation.

www.debenhams.com
5 February 2005

Debenhams On Campaign Trail

Department store giant Debenhams is to embark on a nationwide advertising campaign, in a bid to promote its Designers At Debenhams ranges, Agency Miles Calcraft Briginshaw Duffy is to look after the account, which is reported to cost £16.5m. The London-based firm replaces WCRS, which had held the account for five year.

Debenhams head of marketing Alison Jones told Drapers: We have always featured Designers At Debenhams heavily in our advertising, but will try to raise its profile even higher and make sure people understand it is a high-quality designer range but at accessible prices."

Debenhams wants to double sales from the Designers At ranges, which include names such as Julien Macdonald, Matthew Williamson and John Richmond to more than £400m in the next 18 months. Earlier this year Debenhams launched 'styling the nation' as a promotional hook - which it is set to retain using a more integrated approach to its marketing activities.

In the past, the company's promotional advertising for its Sales and mega days has not been in the same dynamic as its product campaigns, which are more upmarket and more aspirational. Furthermore, the company is contemplating running a model search to find a 'face' to start in its campaigns. The first television and press ads created by the new agency will be launched in March next year.

www.debenhams.com
18 January 2005

Debenhams profits climb

The UK department store chain, Debenhams, has reported its full-year profit to have more than doubled. Debenhams was taken private last year in a GBP 1.72 billion deal by the Baroness Retail Consortium, a group of venture capitalists. The company has now posted pre-tax profits if GBP 330.5 million, up from GBP 137.5 million in the same period last year.

Debenhams revealed that the enormous rise in profits for partially due to an improved stock turn - the rate at which products are converted into cash - and minimized price cutting. The company plans on opening 20 new stores in the coming four years, and will be trying out a mini-Debenhams format. Shareholders in Baroness will receive a GBP 130 million cash pay-back.

www.debenhams.com
8 November 2004

Mini Debenhams

As part of a plan to grow Debenhams, Rob Templeman has drawn up plans to open 'mini-Debenhams' stores on the high street. The 15,000 sq ft stores will sell cosmetics, health and beauty products, lingerie and a limited range of clothing.

The first four trial stores will open in the autumn. If they are a success, Templeman plans to open up to 120 in market towns across the country.

www.debenhams.com
28 July 2004

Fashion To fill Debenhams Gap

Fashion likely to be given additional space in some Debenhams stores following the company's decision to close all its media and electronics departments. Around half of Debenham's 102 stores have departments selling electronics and home entertainment products, to be closed over the next two months. Prior to Christmas Debenhams' staff moved out of branded fashion buying and into own-label in preparations for expansion of its casual labels.

www.debenhams.com
21 January 2004

Debenhams Fears Discounting

Debenhams suppliers fear the imposition of a retrospective discount will be one of the first steps taken by Baroness Retail, which took over the business last week. The retrospective discount, a favourite tactic of recent successful buyers of fashion retailers, is believed by Debenhams suppliers to be on the cards for January. It is understood they currently operate on a standard discount of 13.25 per cent, but it is not yet known how much this may increase by.

Debenhams has stated a series of pre-Christmas promotions, including a 20 per cent reduction for Daily mail readers, and suppliers are agreed at the prospect of having to carry the can for any shortfall in sales. Debenhams head office staff are waiting to see what will happen after last week's GBP1.7 billion takeover by Baroness Retail, the consortium let by retailer John Lovering.

20 December
www.debenhams.com

Debenhams Prepares To Go Private

Trading in Debenhams shares has been suspended on the London Stock Exchange as the department store group prepares to go private. In an official statement Debenhams said shares have been suspended 'pending an announcement'. The move is in line with the legal timetable put in place for the takeover by Baroness Retail, which is due to be completed on Friday.

At that point, Debenhams shares will be permanently delisted as the company becomes the latest high-profile UK retailer to exit the stock market.
The 470p-a-share offer by Baroness Retail, valuing Debenhams at £1.72bn, saw off takeover rival Permira.

Baroness is a consortium including private equity firms CVC Capital Partners and Texas Pacific Group, fronted by retailer John Lovering who will become Debenhams chairman. UK department store operators Allders and Harvey Nichols have both exited the Stock Market to go private this year.

www.debenhams.com
4 December 2003

Bid For Debenhams Remains Open

The offer for Debenhams made by Permira has formally lapsed, leaving the way clear for Baroness Retail, the consortium backed by CVC Capital Partners and Texas Pacific, to acquire the UK department store business.

Although Permira's bid was withdrawn last month, the offer period set out by the Takeover panel needed to expire. With that period now up and the £1.7bn Baroness Retail offer for Debenhams the only one on the table, the long running takeover saga enters its final act.

Debenhams, with around 105 stores, is the UK's number two department store retailer in terms of sales, ranking behind John Lewis which has fewer stores but typically much bigger catchment areas.

5 November 2003
www.debenhams.com

Women's Fashions Boosts Debenhams' Sales

London-based department store group Debenhams posted a 3.9 per cent rise in second half same-store sales due to strong demand for its women's fashions.

For the 26 weeks to Saturday 30 August 2003, total sales were up 7.9% with like for like sales up 3.9%. For the full year to 30 August 2003 total sales were up 6.7% with like for like sales up 3.7%. The gross margin for the 26 weeks to Saturday 30 August 2003 was up by 0.7 percentage points and for the full year to 30 August 2003 was up by 0.4 percentage points.

Belinda Earl, Chief Executive of Debenhams, commented:
"Since we updated the market in July, Debenhams has continued to trade in line with our expectations. The business is benefiting from our investment in the Debenhams brand and our stores, along with an improving performance in Womenswear. We look forward to the opening of our new stores in Birmingham Bullring this week and in Londonderry later this month, which together will add almost 200,000 square feet of trading space."

www.debenhams.com
3 september 2003

Women Prefer Debenhams

Debenhams, H&M, and Marks & Spencer are the most popular shopping destinations for women aged 20 and 45. A survey carried out for Vogue magazine by Taylor Nelson Sofres revealed that 92 per cent of the 2,500 women questioned shopped for clothes at department stores, with 70 per cent regularly visiting Debenhams, followed by House of Fraser at 62 per cent and John Lewis at 56 per cent.

Among Vogue readers, Selfridges topped the list. The designer brand to be most desired was Gucci, followed by Chanel, Armani and Dolce e Gabbana. Almost all respondents agreed that high street stores had improved in the past couple of years.

4 August 2003
www.debenhams.com

Rival Bid Planned for Debenhams

John Lovering, the entrepreneur who recently tried to take over the Somerfield supermarket group, is to make a GBP 1,5b bid for Debenhams, the department store chain.

Lovering has set up a bidding consortium with Texas-Pacific Group, the American buyout house, and CVC Capital Partners, a British private-equity firm.

Last month, Debenhams, which has 102 stores, revealed it had a received an indicative 425p-per-share offer from Permira, a private equity firm. Debenhams closed on Friday at 403p.

Permira, meanwhile, has announced that if its bid succeeds, it will appoint Stuart Rose, the former chief executive of the Arcadia fashion group, as non-executive chairman. Permira is in the middle of carrying out due diligence on Debenhams and is expected to decide whether to make a formal offer in the next there weeks. It is also thought to be searching for bank finance.

30 June 2003
www.debenhams.com

Debenhams Expansion

Department store Debenhams is said to be in discussions about opening a 90,000sq ft branch in Lewisham, South London. The store called the expansion plans 'pure speculation' according to Drapers. The store chain has recently lost a test case against Customs & Excise to determine whether VAT is payable on the handling fee of 2.5 per cent charged on credit card transactions.

10 June 2003
www.debenhams.com

Sums on Debenhams

Last week it was announced that a major private equity firm had approached the management of Debenhams with a view to back them in a buyout. There are likely to be more of these public to private deals because venture capitalists have plenty of cash and interest rates on borrowed money are low. As a theoretical exercise, it is worth examining how a deal like this could make money for the backers to see what Debenhams should be worth to a leveraged bidder.

The deparment store chain is an attractive target because it is a stable, cash-generative business with substantial assets. It is enjoying positive like-for-like sales and increasing earnings and dividents. Despite the uncertain retail environment, Debenham's proves a robust business. It owns freehold and long leasehold department stores well worth over the GBP 340m book value, since they were last valued eight years ago.

The mooted price of 425p a share values their share capital at GBP 1.56 bn, and the business carries about GBP 135 in debt. Fees for a deal would probably be at least GBP 75m, giving a total cost of roughly GBP 1.8bn to undertake the buyout.

Over the past five years Debenhams has invested over GBP 600m in new stores and refurbishments. In the next three years, it plans to spend GBP 430m and open nine new stores - GBP170m alone is to be spent in 2004/5. The company has recently been spending GBP 100m annually on share buybacks and dividend payments. Like most buyouts, there will be room to save on this capital expenditure.

19 May 2003
www.debenhams.com

Permira fights for Debenhams

Debenhams Plc, Britain's second- largest department-store franchise, received a lucrative proposal from Permira Advisers Ltd. valued at approximately 1.5 billion pounds ($2.4 billion), the latest take over bid for a U.K. retailer. Competitors like Selfridges Plc and House of Fraser Plc also joins Debenhams in attracting takeover interests.

Permira, a London-based private equity firm previously known as Schroder Ventures Europe, is offering a cash bid of 425 pence a share, which increased Debenhams, shares with 29 percent. Permira, who has a history of buying and selling retail companies, in November sold U.K. home-improvement chain Homebase Group Ltd. to GUS Plc for 900 million pounds, acquiring more than five times its investment.

According to Andrew Grant, the retailer's representative, Permira approached Debenhams' board with its proposal last week. It is seeking to back a buyout of the company, which would include Chief Executive Officer Belinda Earl. Managers have been given permission by Debenhams' board to work on a proposal.
Whether Debenhams plans to spend 430 million pounds opening nine new department stores and renovating others by spring 2005, while creating about 2,000 jobs, is still questionable.

May 15, 2003
www.debenhams.com

Debenhams H1 sales up

UK department store operator Debenhams Plc announced sales for the first half ended March 1, 2003 up 5.8% to GBP 992.1 million. On a like-for-like basis, sales increased 3.5%, Debenhams said in a statement. Pre-tax profit rose 4.8% to GBP 96.5 million. The company opened three new stores in the first half, in Perth, Basingstoke and Redditch.

New stores are a major part of Debenhams' growth strategy. Since March 1, the chain has opened branches in Inverness and East Kilbride, giving it a total of 102 pos in the UK and Ireland. Debenhams announced plans for five new stores, in Newport, Blackpool, Harlow, Newry and Craigavon, scheduled for opening by 2007. This is in addition to 11 new stores already in the pipeline for the company in the same timeframe.

April 17, 2003
www.debenhams.com

Boosted profits at Debenhams

Britain's second biggest department store group saw a 5.1% rise in full-year profits, despite having to discount prices to shift excess stock in the summer. Profits improved to £153.6m for the year ended August 31 after like-for-like sales grew 4.8%. Total sales in the 12 months to the end of August were up 5% at £1.69bn with like-for-like sales ahead by 4.8%. Underlying sales in the first seven weeks of its new year are up 4.6%, said the company.

The group said it had managed to protect margins by controlling costs and taking out 200 jobs in its head office in recent months. The group wants to attract 5m new customers over the next five years by opening dozens of new stores in the UK and overseas.

Two more have been added to the pipeline, in Workington and Cork, which will take Debenhams' store base in the UK and Ireland to 111 by 2006.

October 23, 2002
www.debenhams.com

Debenhams plans 12 stores worldwide by 2004

Debenhams plc is one of the most successful British high street retailers. The middle-market company, which has 97 stores in the UK and has strongly improved its image over the last years, is also stepping up its international presence.

Preliminary Results for the 53 weeks ended 1 September 2001 Full year highlights:

Total sales up 15.4% at £1,612.9 million - while maintaining the gross margin
Like-for-like sales up 8.0%
Profit before tax up 12.7% to £146.1 million
Earnings per share up 18.2% to 27.9p
Cash inflow from operating activities of £226.1 million (1999/00 £193.3 million)
Final dividend at 7.1p per share, making a total dividend of 11.7p (1999/00 10.7p)

Current trading and developments:
In the 7 weeks to 20 October 2001 like-for-like sales up 3.4% and the gross margin up approximately 1.0%
Successful new store and modernisation programme - a further 2 new UK stores, 15 modernisations and 1 international store announced today - creating over 500 new jobs in the UK

Commenting on the results, Belinda Earl, Chief Executive said:
"We are delighted to report record profits and announce further new store openings. The strategic investments that we have made to drive sales forward, such as store development and staffing initiatives, are showing good levels of return. The Debenhams brand continues to strengthen and we have gained market share in our key product areas.

The new financial year started well with sales, for the first 5 weeks to 6 October 2001, at a similarly high level to that seen over the Summer. The following 2 weeks, when we were on Sale, were disappointing but the gross margin was ahead reflecting our strategic decision to take less mark down. During the first 7 weeks to 20 October 2001, total sales were up 8.3% with like-for-like sales up 3.4% and the gross margin was ahead by approximately 1.0%.

The recent volatility in sales makes it hard to know whether the downturn reflects a fall in consumer confidence. However, we are in a strong position with limited exposure to tourism and we are well spread geographically. We are confident that our strategy is robust and flexible enough to allow us to outperform the market."

The project "Designers at Debenhams", which aims at increasing the number of international brands in the stores, is reported to be a success. The division now offers the products of 25 designers and accounted for sales of GBP 76m against GBP 30m a year ago. The group, which presently has seven international franchise stores, recently opened two new stores in Riyadh, Saudi Arabia and Reykjavik, Iceland. A second Saudi Arabian store will open shortly in Jeddah. Debenhams is currently looking for new international locations and plans to increase the number of international stores to 12 by 2004.

23-10-2001
www.debenhams.com