17th Mar 2009 07:00
17 March 2009
DEBENHAMS plc
FIRST HALF TRADING UPDATE
Sales, gross margin and profits increase
Market share gains in all major categories
Net debt lower than last year
Debenhams plc, the leading department stores group, today releases its trading update for the 26 weeks ended 28 February 2009.
Gross transaction value for the 26 weeks ended 28 February 2009 was 0.3% higher than the prior year despite challenging trading conditions across the retail sector. Debenhams has continued to take market share from its competitors in all major product categories, a positive trend which has now prevailed for 18 months. Excluding VAT, like-for-like sales for the period were 3.6% lower than last year.
Own bought ranges and particularly Designers at Debenhams ranges have delivered good sales growth and further progress has been made in our strategy to increase own bought participation. The strength of own bought sales has contributed to a positive movement in gross margin and we expect gross margin for the first half to be higher than last year.
The combined impact of higher gross transaction value and gross margin with the continuing tight management of costs and stocks alongside management's focus on the levers that drive cash margin will result in first half profit before tax and EBITDA being ahead of the previous year.
A strong focus on stock management has also resulted in terminal stocks being at a historically low level at the end of the first half. Our strategy of improving the consumer experience through the rationalisation of some of our ranges has also led to a significant reduction in stock densities.
Debenhams continues to generate strong cash flows and net debt at the end of the half was lower than the prior year.
Since the end of the first half, we have taken the opportunity to acquire a quantity of stock and fixtures and fittings from the administrators of Principles as well as a licence to trade the brand. This will ensure continuity of supply to our business and accords with our intention to increase the own bought sales mix. Whilst the exact quantity of stock acquired is currently being finalised, we believe that this purchase will be beneficial for our business.
Commenting on the first half, Rob Templeman, CEO of Debenhams, said:
"We are pleased with our performance during the first half of the year given the extremely difficult trading conditions experienced across the high street. We have continued to grow our top line and to take market share as consumers increasingly recognise the great value in terms of quality, price and design that our products and especially Designers at Debenhams deliver.
"We have said previously that our main focus is on cash profit rather than just sales and our increase in profits during the first half despite the environment is testament to this aim and to the close management of resources throughout the business.
"Visibility for the second half remains poor and we will continue to run Debenhams in the expectation that the trading environment will remain challenging."
A conference call will be held today at 8:30am on +44 (0) 20 8609 1270. A replay of the call will be available for seven days on +44 (0) 20 8609 0289, PIN 257596#.
Debenhams' interim results will be announced on 23 April 2009. Please note this revised date.
Enquiries
Debenhams plc
Rob Templeman, Chief Executive
Chris Woodhouse, Finance Director 020 7408 3302
Lisa Williams, Investor Relations 020 7408 3304
Financial Dynamics
Jonathon Brill 020 7269 7170
Billy Clegg 020 7269 7157
Caroline Stewart 020 7269 7227
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 including Womenswear, Menswear, Childrenswear, Home and Health and Beauty.
Debenhams has a total of 144 department stores in the UK and the Republic of Ireland and 10 Desire by Debenhams stores, which is a small store concept featuring a mix of womenswear, accessories, lingerie, cosmetics and childrenswear. Debenhams has 49 international franchise stores in 18 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, Pip Hackett, Betty Jackson, Ben de Lisi, Julien Macdonald, Melissa Odabash, Jane Packer, Pearce Fionda, Janet Reger, John Rocha and Matthew Williamson
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