22nd Jun 2016 06:15
LONDON (Alliance News) - Department store retailer Debenhams PLC on Wednesday said its annual pretax profit is set to meet its guidance, though it slightly pulled back its margin forecasts as like-for-like sales declined in the 15 weeks to June 11.
The FTSE 250-listed group said gross transaction values in the 15 weeks to June 11 grew 0.5% year-on-year, while like-for-like sales in the period declined 0.2%. Online sales grew 7.0% year-on-year. Group constant currency like-for-like sales were down 1.6%.
Gross transaction values for the 41 weeks to June 11 grew 1.3% year-on-year, Debenhams said, while like-for-like sales have grown 0.7%, indicating a slowdown in the most recent trading period.
Debenhams said the trading environment in the UK has been weaker since the turn of the year, particularly for clothing. A push by the group to increase its non-clothing sales has helped to offset this in terms of total sales, with particularly good growth in health and beauty sales.
Debenhams said growth in group costs for the year will be at the lower end of previous guidance, including the extra cost related to the introduction of the National Living Wage in the UK, but said its gross margin guidance has been moved to flat for the full year, from a previous expectation of flat to a 50 basis point expansion.
Despite a volatile trading environment, Debenhams said it is on track to market expectations for pretax profit for the full year.
"Our strategy remains unchanged, with further progress in driving our non-clothing mix, continuing to improve service for multi-channel customers, and offering a wider choice of products and services in under-optimised space. In response to more uncertain trading conditions in this period, particularly in clothing, we have focused on managing stock and margins and generating cash," said Michael Sharp, the outgoing chief executive of Debenhams.
Sharp will be replaced by Sergio Bucher, who has joined from US e-commerce retail giant Amazon.com Inc, at the end of this week.
By Sam Unsted; [email protected]; @SamUAtAlliance
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