Cold snap helps Debenhams wrap up a recovery in sales

Debenhams predicted a buoyant Christmas yesterday as the department store retailer reassured the City with strong sales growth helped by the recent cold snap.

Shares in the high street retailer soared 10 per cent to 284p on the news, which followed a disappointing trading statement in the summer when the company was left with unsold fashion stock that had to be discounted.

Like-for-like sales in the seven weeks to 19 October were up a healthy 4.6 per cent. This was only marginally down on the 4.8 per cent figure in the full year to 31 August. Gross margins were down by 0.2 percentage points over the year, largely due to the summer sale. The company has since replaced its head of womenswear.

Rising interest in fashion has produced hot-sellers such as parkas for men and sheepskin and denim for both men and women.

Announcing a 5 per cent rise in full-year profits to £154m, Belinda Earl, the chief executive, said: "We are very confident about Christmas though we are cautious about the economic outlook longer term. As long as house prices continue to be sustained I find no reason for things to abate."

Debenhams says it has held share in womenswear against a recovering Marks & Spencer. It has also gained share in childrenswear against a weak Mothercare and against M&S which recently ousted the head of its children's division.

Debenhams plans to introduce a Giftcard next month which will enable customers to load cash on to a store card instead of donating vouchers. "It is popular with students going to university and has done well in America," Ms Earl said.

The company will launch a new fashion brand called Spirit next month. The brand will be promoted by the former Eastenders star Tamzin Outhwaite.

Debenhams has an aggressive store-opening programme designed to take its portfolio from the current 99 branches to 120 within five years and 150 within 10 years.

The group is also expanding overseas with franchise outlets. It wants to increase the number from 10 to 30.

"They have recovered well after a tough September but they are up against an improving M&S," one analyst said.