6th Jan 2009 07:00
6 January 2009
DEBENHAMS plc
INTERIM MANAGEMENT STATEMENT
Sales increase
Profit ahead of last year
Net debt down
Market share gains in all major categories
Debenhams plc, the leading department stores group, today releases its interim management statement for the year-to-date. This covers the 18 weeks ended 3 January 2009.
For the 12 weeks since Debenhams last reported on 21 October 2008, gross transaction value was 1.1% higher than last year. Like-for-like sales for this period decreased by 3.3%. This represented an improvement over the like-for-like decline of 4.2% recorded for the first six weeks of the financial year.
For the 18 weeks ended 3 January 2009, gross transaction value was 0.6% above the comparative period last year. Like-for-like sales for the 18 weeks were 3.5% lower than last year reflecting the extremely difficult and volatile trading environment seen across the retail sector. Following on from the strong market share gains in the last financial year, Debenhams has continued to take market share from competitors in all major categories.
Gross margin year-to-date was flat on last year.
Profit before tax and EBITDA for the 18 week period were both up on last year due to the increase in gross transaction value, the continuing tight management of costs and stocks and our decision to focus on the levers that drive cash margin.
Stocks have been tightly controlled during the period with total stock levels closing 7.3% below last year, representing a stock density reduction of 13.4%. Terminal stocks are forecast to be at near historical low for the half year.
We have been pleased with the performance of own bought products which have continued to grow at a faster rate than concessions. In particular our exclusive Designers at Debenhams brands have made a strong contribution to market share gains and to the overall performance of the business. These brands provide an important competitive advantage as consumers are looking for the latest styles and fashions but are also seeking the assurance of quality, durability and superb value that Designers at Debenhams represent.
Debenhams trading results reflect our decision in early 2008 to reduce the number of SKU options and absolute stock levels within the business whilst investing in greater availability of bestsellers. Our emphasis on delivering value - not just through meaningful price reductions but more through adding extra quality and design features into our products - has been, in our view, a critical factor in our relative out-performance.
Since the start of the year four new department stores have been opened, increasing trading space by some 2.3% giving us 10,953,000 square feet of prime trading space. The total number of stores within the UK and Ireland now stands at 153 compared to 146 at this time last year.
Debenhams Direct, the online business, continued to grow strongly with year-to-date visitor numbers and sales up 39.2% and 37.4% respectively. The international franchise business also performed well and seven new stores in five countries opened during the period.
Rob Templeman, Chief Executive of Debenhams, said:
"Our trading strategy for the first 18 weeks of the year has resulted in further market share gains and a creditable sales performance given the extremely difficult and volatile conditions seen across the high street. Our increase in profits is pleasing and reflects our stated intention to invest gross margin gains in strategic promotions as needed but overall to run the business focussing on cash profit rather than just sales.
"More than ever consumers are looking for high quality products at good value prices. Debenhams has supplied this during the important Christmas trading period through ongoing improvements to our designs and products made over the past 18 months alongside tactical promotional activity.
"Looking forward, the trading environment is likely to remain challenging for the whole retail sector. We will continue to focus on bringing fashionable and stylish products to the consumer as well as managing the business with an emphasis on the tight control of costs, stocks and capital."
John Lovering, Chairman of Debenhams, said:
"Only the best positioned and managed businesses will emerge from the recession in a position to capitalise on the shake out currently taking place within our industry. Debenhams has a great consumer franchise, a first class store portfolio and a unique depth of experienced, commercial management. We will continue to take all the necessary steps to ensure that Debenhams emerges from the challenging and competitive conditions in 2009 as one of the retail winners.
"The Board and I would like to thank all of our colleagues throughout the business for an outstanding effort particularly over the critical Christmas period; their hard work and commitment have really made the difference in these testing times."
A conference call will be held today at 10:30am on 020 3003 2666 (UK) or +44 (0) 20 3003 2666 (overseas), conference call title "Debenhams plc IMS". A replay of the call will be available for seven days on 020 8196 1998 (UK) or +44 (0) 20 8196 1998 (overseas), PIN 4452389#.
Enquiries
Analysts/Shareholders
Debenhams plc
Rob Templeman, Chief Executive
Chris Woodhouse, Finance Director 020 7408 3302
Lisa Williams, Investor Relations 020 7408 3304
Media
Financial Dynamics
Jonathon Brill 020 7269 7170
Billy Clegg 020 7269 7157
High resolution images are available for media to view and download free of charge from www.prshots.com/Debenhams.
Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences and prospects are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect Debenhams' current expectations concerning future events and actual results may differ materially from current expectations or historical results. Any such forward-looking statements are subject to various risks and uncertainties, including: Debenhams' ability to accurately predict customer preferences and demands; the effectiveness of Debenhams' brand awareness and marketing programmes; the occurrence of weak sales during peak selling seasons or extreme or unseasonal weather conditions; difficult market conditions and fragile consumer confidence; competitive factors in the highly competitive retail industry; Debenhams' ability to successfully implement its new store rollout and department store refurbishment/modernization strategy; Debenhams' ability to maintain its relationships with certain designers and its significant concession partner; and currency fluctuations and currency risk.
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Additional risk factors that you may want to consider are: Debenhams' ability to retain key management and personnel; disruptions or other adverse events affecting Debenhams' relationship with its major suppliers or its store card provider; factors outside Debenhams' control, such as changes in the financial or equity markets, adverse economic conditions or a downturn in the retail industry, or damage or interruptions due to operational disruption, natural disaster, war or terrorist activity; and work stoppages; slowdowns or strikes.
Notes to Editors
Debenhams is a leading department stores group with a strong presence in key product categories, such as womenswear, menswear, homeware and health and beauty.
Debenhams has a total of 153 stores in the UK and Republic Ireland, comprising 143 department stores and 10 Desire by Debenhams stores, the small store concept which features a mix of womenswear, accessories, lingerie, cosmetics and childrenswear. Debenhams has a further 48 international franchise stores in 17 countries and an online store, www.debenhams.com, through which much of the Debenhams' range is available.
Debenhams is the second largest department store chain in the UK.
Designers at Debenhams include Ted Baker, Jasper Conran, Erickson Beamon, Frost French, Pip Hackett, Betty Jackson, Ben de Lisi, Julien Macdonald, Melissa Odabash, Jane Packer, Pearce Fionda, Janet Reger, John Rocha, Eric von Peterson and Matthew Williamson.
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