Debenhams sales struggle during important Christmas period

Debenhams plc in its trading update for the 17 weeks to December 30, 2017 said that group gross transaction value declined 0.8 percent, while group like-for-like sales as reported were down 1.3 percent. The company’s like-for-like sales in constant currency declined 1.8 percent including UK LFL down 2.6 percent and international up 2.1 percent. Digital sales rose 9.9 percent with two- year growth of 22 percent.

Commenting on the festive trading, Sergio Bucher, Chief Executive of Debenhams, said in a media statement: "The market has been challenging and particularly promotional in some of our key seasonal categories and we have responded in order to remain competitive for our customers, which has impacted our profit performance. Nevertheless, we are seeing positive early signs from the changes we have made as part of our Debenhams Redesigned strategy."

Debenhams experiences subdued festive sales

The company said, early weeks of the quarter were disappointing as the market remained volatile and competitive and Debenhams took tactical promotional action to improve performance which resulted in a stronger six week Christmas period against tough comparatives, with LFL sales up 1.2 percent in constant currency and digital growth of 15.1 percent. However, the first week of post-Christmas sale, the company added, was below expectations despite further markdown investment, particularly in the highly seasonal gift category.

H1 gross margins, Debenhams said, are now expected to be 150bps down on the prior year, as a result of the promotional market and to deliver a clean end-season stock position. Looking ahead, should the current competitive and volatile environment continue into H2, the company expects FY2018 profit before tax to be in the range of 55 million to 65million pounds (74 to 88 million dollars).

The UK trading environment for Debenhams continued to remain volatile and highly competitive with weaker demand in some more discretionary areas. Against this background, the company saw positive developments in beauty and food categories and managed to improve full price share in a fashion market that continues to decline. A disappointing gift performance however drove increased promotional activity in this important seasonal category at the company.

Internationally, Magasin du Nord in Denmark and Debenhams in the Republic of Ireland delivered positive LFL growth in constant currency.

Picture:Debenhams website