Debenhams and Punch seek to calm jitters with early updates
Wednesday 25 June 2008
Two of the UK's most high-profile companies, Debenhams and Punch Taverns, brought forward their trading statements yesterday to reassure jittery investors following market speculation about their performance.
Debenhams chief executive, Rob Templeman, said it was presenting its interim management statement a week early to address the "inaccurate market rumours and speculation" about its recent performance and the amount of debt on its balance sheet.
The department store group said its like-for-like sales rose 1 per cent over the 10 weeks to 21 June.
Mr Templeman said: "It is tough out there, [but] the like-for-likes for the last 10 weeks are better than most in the sector. We are consistently continuing to grow [market] share across our key product categories. Our market guidance for the year ahead remains unchanged."
Its Designers at Debenhams ranges, such as Julien MacDonald, contributed strongly to the improved sales performance, said Mr Templeman.
Debenhams, which had net borrowings of £979m as of 1 March, said it has delivered cost savings of £20m as part of its plans to cut debt. "There has always been talk around leverage on the balance sheet. It is a highly cash generative business," said Mr Templeman. He added that the retailer's new flagship store which opened in Liverpool at the end of May is trading ahead of expectations.
Debenhams plans to open two further department stores in Dunfermline and Blackpool before the end of the financial year.
Shore Capital analyst John Stevenson said: "Having addressed the 'scare stories', we would expect the shares to regain lost ground over the short term. Nonetheless, Debenhams remains highly financially and operationally geared, and we believe we have yet to reach the consumer nadir."
Separately, the pub company Punch Taverns said it was confident of meeting market expectations for full-year profits and that its balance sheet remained "strong". Punch Taverns chief executive Giles Thorley said: "Punch remains extremely robust from both an operational and financing perspective, despite the challenging consumer environment."
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