16th Mar 2007 07:01
Debenhams plc16 March 2007 Debenhams plc Pre-Close Trading Update Debenhams plc, the leading department stores group, today releases a pre-closeinterim trading update for the first half of the financial year. Total sales for the 26 weeks ended 3rd March 2007 increased by 5.8% compared tothe 26 weeks ended 4th March 2006. Like-for-like sales for the UK retailbusiness have declined by 4.5% compared to the equivalent period last year. Gross margins for the 26 weeks to 3rd March 2007 were 42.5% having fallen 0.4%versus the corresponding period last year. The reduction in gross margin was largely attributable to the impact of theRoches store integration and the shortfall in clothing sales following theunseasonally warm pre-Christmas trading period. We still expect to see furtherprogress on gross margin for the full year. Stocks and costs continue to be tightly controlled and we expect profit beforetaxation and exceptional items to be in line with the Board's expectations atthe time of the January trading statement. The integration of the nine stores acquired in the Republic of Ireland fromRoches stores in September 2006 is progressing well. The conversion of seven ofthe stores to the Debenhams trading format is largely complete and we expect theremaining two stores to be completed during the second half of the financialyear. Initial trading at these stores is in line with our expectations. In line with our strategy of expanding our department store portfolio, goodprogress has been made with our store opening programme. At the start of thisfinancial year Debenhams had a contracted new store opening pipeline of 25stores, this has grown to a current pipeline of 29 new department stores. A newdepartment store was opened in Llandudno in the first half and two new storesare scheduled to open in Warrington and Wigan (1) in the second half. In thenext year (FY 2008) seven new department stores and three re-sites are plannedto open. The number of Desire by Debenhams smaller format stores has also increased, fromfour stores trading at the start of the financial year to seven at 3rd March2007, with new stores opened at Merthyr Tydfil, Birmingham Fort and Kirkcaldy. Afurther two Desire stores are planned to open in the second half of thisfinancial year. At 3rd March 2007 our store portfolio, including the stores acquired fromRoches, consists of 132 department stores, and seven Desire stores totalling10.2 million square feet of prime trading space across the UK and Republic ofIreland. In addition, Debenhams continues to expand its global presence with 32international stores trading, an increase of eight from 4th March 2006. Twofurther stores are scheduled to open by the end of April 2007. Rob Templeman, Chief Executive, said: "Although it is far too early to draw conclusions on the performance of ourSpring/Summer ranges, we have been encouraged by the consumer reaction to ournew collections. We continue to expect the retail environment to remain challenging and to thisend we will focus on managing our stocks, costs and cash margins." Note:- (1) Store re-site Debenhams will be reporting its preliminary results for the 26 weeks ended 3March at 7am on April 17th, 2007, including a presentation for analysts at9.30am at the City Presentation Centre, 4 Chiswell Street, London, EC1Y 4UP. Enquiries: Media College Hill Andy Cornelius 020 7457 2822 Duncan Murray 020 7457 2823 Analysts Debenhams plc Rob Templeman, Chief Executive Chris Woodhouse, Finance Director 0207 408 3302 High resolution images are available for media to view and download free ofcharge from www.prshots.com/Debenhams Statements made in this announcement that look forward in time or that expressmanagement's beliefs, expectations or estimates regarding future occurrences andprospects are "forward-looking statements" within the meaning of the UnitedStates federal securities laws. These forward-looking statements reflectDebenhams' current expectations concerning future events and actual results maydiffer materially from current expectations or historical results. Any suchforward-looking statements are subject to various risks and uncertainties,including: Debenhams' ability to accurately predict customer preferences anddemands; the effectiveness of Debenhams' brand awareness and marketingprogrammes; the occurrence of weak sales during peak selling seasons or extremeor unseasonal weather conditions; competitive factors in the highly competitiveretail industry; Debenhams' ability to successfully implement its new storerollout and department store refurbishment/modernization strategy; Debenhams'ability to maintain its relationships with certain designers and its significantconcession partners; currency fluctuations and currency risk. * * * Additional risk factors that you may want to consider are: Debenhams' ability toretain key management and personnel; disruptions or other adverse eventsaffecting Debenhams' relationship with its major suppliers or its store cardprovider; factors outside Debenhams' control, such as changes in the financialor equity markets, adverse economic conditions or a downturn in the retailindustry, or damage or interruptions due to operational disruption, naturaldisaster, war or terrorist activity; and work stoppages; slowdowns or strikes. 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