Debenhams sales shine despite retail headwinds

Department store group Debenhams reported an increase in like-for-like sales and, despite challenging markets, said it would meet annual profit expectations.

Like-for-like sales in the 52 weeks to 1st September increased 2.3% including VAT and 1.6% excluding VAT. Sales at stores open over a year rose 3.7%, excluding VAT, in the 10 weeks to 1st September.

Britain's second largest department store said improved sales were driven by market share gains in womenswear and other key categories, good growth in international businesses and as online sales grew by 40%.

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Visits to debenhams.com have increased by over 50%, driven in part by extremely strong growth in mobile channels, the group explained.

Chief Executive Michael Sharp said: "To deliver like-for-like sales growth in these extremely challenging market conditions is highly creditable and we achieved this result by relentlessly focusing on our customers."

He added: "We do not anticipate a significant change in the economic environment in the near future but we expect to continue to make progress in 2013."

Gross margin for the 52 weeks to 1 September 2012 is expected to be in line with guidance of 30 basis points lower than last year, largely due to a weather-related sales mix change towards health and beauty as well as higher concession sales resulting from our moves to add choice, Debenhams said.

Looking ahead and taking into account the foregoing like-for-like sales performance and guidance for gross margin and costs, the retailer expects pre-tax profit for the 52 weeks to 1 September 2012 to be ahead of last year and in line with current market expectations.

The group also highlighted further debt reduction, with an initial £20m share buy-back completed by year-end.

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