Debenhams'designers boost its performance

Fourth-quarter sales hit by changes to trading space

Debenhams said the biggest change to floor space in its history had given it greater control over its "own destiny", after it forecast a rise in annual profits.

The department store, which has 154 shops in the UK and Republic of Ireland, has moved 530,000 square feet of trading space away from concessions to its more profitable own-bought ranges – particularly Designers at Debenhams – over its fourth quarter to 29 August, although this disruption has dragged down its underlying sales.

Michael Sharp, Debenhams' deputy chief executive, said: "We moved that space because we have seen a strengthening of our sales and profit performance on own-bought and a weakening of concessions." For instance, Debenhams management were distracted sorting out problems related to the concessions backed by Icelandic banks, such as Principles, which collapsed into administration earlier this year.

While he did not refer to any brands, Mr Sharp said: "It gives us more control over our own destiny. We are less reliant on people running their businesses badly and it increases the exclusivity of Debenhams and improves margins, although the sales densities are lower [on own-bought]."

The department store said its Designer at Debenhams ranges, which include John Rocha and Jasper Conran, had continued to deliver "double digit" sales over the year, which helped to drive a gross margin uplift of 70 basis points.

The department store – which also has 52 international franchise stores, including in India, the Czech Republic and Saudi Arabia – yesterday confirmed it had added the designer Henry Holland to its stable of Designers at Debenhams. The H! by Henry Holland collection is aimed at shoppers aged between 17 and 25 years and will go into 60 stores and on its website next spring.

Own-bought ranges now make up about 80 per cent of Debenhams' products, but the disruptioncut its like-for-like sales – which strip out the impact of new space – by 3.8 per cent over the half-year, compared with adrop of 3.6 per cent for theyear. Tony Shiret, of Credit Suisse, said the 3.8 per cent fall in sales implied that like-for-likes were down by about 7 per cent in the fourth-quarter. But gross transaction value was up by 0.2 per cent for the year.

While Debenhams did not provide a figure, the City expects it to increase pre-tax profits to between £122m and £124m over the year to 29 August, a rise of as much as 13 per cent on last year's £110.1m. Mr Sharp said: "We think it is a very creditable set of results, particularly given that Debenhams' financial year coincided with the credit crunch, Lehman Brothers and everything else that has happened over the last year."

Debenhams – which in June raised £323m in a placing and open offer to take its debt pile off the agenda – said it had repurchased £61.4m of its debt at an average discount of 5.6 per cent at the year end. Matthew McEachran, an analyst at Singer Capital Markets, forecast that the department store's net debt was £596.6mon 29 August.

Looking ahead, Mr Sharp said Debenhams will be as promotional as last year in the run up to, andduring, the Christmas period,after a series of high-profile sales events last year. He added that these promotions tend to be planned six months in advance.

On the outlook for the sector, Mr Sharp said: "We are working on the basis that trading going forward will be as difficult as the last 12 months," adding that fear of unemployment was the factor most affecting consumer sentiment.

Sales counter: Waitrose powers ahead of rivals

Waitrose has again delivered the best sales in the grocery sector for the 12 weeks to 7 September, while Tesco continues to lag behind its rivals, according to TNS Worldpanel. The John Lewis Partnership-owned grocer posted barnstorming sales up by 11.2 per cent, driven by the launch of its Essential Waitrose value range in March.

The discounters Aldi and Lidl posted sales up by 8 per cent and 5.2 per cent respectively, much slower than their booming sales last year, said TNS.

Tesco's sales growth slowed to 4.6 per cent – behind the market growth of 5.2 per cent – despite a relaunch of its Clubcard loyalty scheme in August. The sales growth at the UK's biggest retailer is now less than half of Morrisons' 9.3 per cent, and also trails Asda's 7.8 per cent and Sainsbury's 7 per cent.

However, separate data from Nielsen for the same period indicated that Tesco's Clubcard 2 had boosted shoppers' spend per visit by up to 5 per cent.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...