Debenhams plans stores expansion

The new boss of department store chain Debenhams insisted the UK high street was "alive and well" today as he announced plans to modernise a further 25 stores and open nine new outlets over the next four years.

The expansion drive, which will create 4,050 new jobs, builds on the 20 store refurbishments the retailer announced in June.

Chief executive Michael Sharp said the expansion was a strong signal about its commitment to the UK high street, which he said Debenhams was "backing 100%".

The chain, which operates 163 stores in the UK and Ireland, eventually hopes to boost its UK store portfolio to 240. The nine new stores will open between 2012 and 2015 in Chesterfield, Burton upon Trent, Darlington, Carlow and Sligo in Ireland, Bradford, Hereford, Barnsley and Macclesfield.

The expansion update came as the firm said pre-tax profits increased 10% to £166.1 million in the 53 weeks to September 3 as it benefited from selling more of its higher margin exclusive ranges.

Debenhams said its number of international franchise stores will double to 130 over the next five years.

Mr Sharp, who took over as chief executive last month, said: "This is a strong signal that the UK high street is alive and well and we are backing it 100%.

"It also shows a very real commitment to our clear focus on growing our UK retail business."

The chain has already modernised 14 stores across the country since spring last year.

Last week Debenhams announced it would create 6,500 seasonal jobs in the run-up to Christmas.

The 20 stores to receive a makeover by 2012 are in Chester, Bournemouth, Harrow, Luton, Colchester, Harrogate, Preston, Middlesbrough, Cheltenham, Reading, Northampton, Bedford, Hull, Carlisle, Worthing, Sutton, Plymouth, Salisbury, Blackburn and Southend on Sea.

Debenhams' full-year profits improved despite a 0.3% fall in like-for-like sales excluding VAT.

Its margins were under pressure as it was forced to put on more discounts to shift stock and it struggled to pass on rising cotton prices to consumers.

But this was partly offset by selling more higher-margin exclusive products such as its Designers at Debenhams ranges.

Its tactic of discounting helped it gain share of most of its markets, including casual womenswear, menswear, childrenswear and premium health and beauty.

Debenhams also announced it is to start returning cash to shareholders through a share buy-back scheme.

Shares were up 1% following the announcement.

But Kate Calvert, an analyst at Seymour Pierce, said: "The announcement that the company intends to start a share buy-back confirms to us the company's limited growth prospects over the next few years and we feel it is a little premature, given the state of the UK consumer."

PA