20th Jun 2014 07:01
LONDON (Alliance News) - High street department store chain Debenhams PLC Friday said like-for-like sales rose slightly in the first 14 weeks of the second half of its financial year, supported an increase in the gross value of transactions.
Debenhams said like-for-like sales were up 0.7% in the 14 weeks to June 7, as it recorded a 1.6% increase in gross transaction value, which are sales on a gross basis before adjusting for concessions, consignments and staff discounts.
"We expect our revised promotional strategy will continue to result in lower markdown leading to a stronger gross margin performance for the second half," the company said in a statement.
Debenhams said its gross margin guidance for the full year remains unchanged, as it still expects to see a decline in margins of between 50 to 70 basis points, hit by heavy discounting earlier in the year, but supported by lower markdown in the second half of the year.
Going forward, Debenhams has pledged to do fewer small promotional sales, and focus just on its bigger events like its 'Blue Cross' sale event, in hope of selling more full-priced goods. The retailer also said that it will tolerate market share losses for an improvement in cash gross profit, with the aim to improve margins through lower markdown in the medium term.
"Although early days, this strategy is delivering higher full-price sales, and we expect to see the benefit through gross margin progression in the second half of the year and in 2015," said Chief Executive Michael Sharp in a statement.
The retailer said its continued to see growth in online sales and saw a strong performance from its international business.
In the year to date, Debenhams said like-for-like sales were up 1.3% in the 40 weeks to June 7.
Debenhams also said that it will be launching trial concessions with sports product retailer Sports Direct International PLC, and and coffee chain Costa, owned by Whitbread PLC. It said it is in discussion with a number of other brands.
In a separate statement, Debenhams said it will be launching an offer of GBP200 million senior notes due 2021, proceeds it said it will used to prepay existing credit facilities and to pay the fees and expenses related to the offering and sale of the notes.
At the open Friday, Debenhams shares were off 0.1% at 72.00 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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