The UK high street is 'alive and well', Debenhams says

Retailer has stores in 25 countries. It plans to double its franchise shops abroad over five years

The department store Debenhams and better-than-expected retail sales data have provided the UK's beleaguered high street with some much-needed cheer ahead of the crucial Christmas trading period.

Debenhams unveiled a 10 per cent rise in pre-tax profits to £166.1m for the 53 weeks to 3 September, a share buy-back and said it was "optimistic" about its prospects. The retailer also revealed extensive plans to grow its store numbers in the UK and overseas, as well as expanding online.

Meanwhile, the Office for National Statistics said that UK retail sales volumes rose by a surprise 0.6 per cent in September – compared with forecasts of a flat performance – boosted by purchases of laptops and video games, after the riots in August disrupted trading. But the massive impact of inflation was laid bare in sales by value rising by 5.4 per cent in September compared to the same month last year.

Despite this, Michael Sharp, the chief executive of Debenhams, struck a confident tone on the group's prospects. The group is to increase its store presence in the UK significantly at a time when many retailers are axing shops to shore up their finances. The high- street stalwart only has 163 UK stores and believes there is scope for 240 as it seeks to take advantage of the soft property market. The UK high street is "alive and well", he said.

Mr Sharp said: "Property developers have responded with some deals that make commercial sense."

Debenhams, which has stores in 25 countries, from Kazakhstan to Indonesia, also plans to double its franchise shops overseas from 65 to 130 over the next five years.

Another tonic was that Debenhams returned Magasin du Nord, the Danish department store it acquired in 2009, to profit. Total group sales rose by 2.9 per cent to £2.68bn.

Debenhams' profits were boosted by a major shift to own-brand products, although its like-for-like sales fell by 0.3 per cent. However, it benefited from lower financing costs after reducing its net debt by £133.1m to £383.7m. This improvement in its capital structure allowed Debenhams to pay a total dividend of 3p, following a three-year hiatus. With lower debt, Mr Sharp said the share buy-back scheduled for the second-half of 2011-12 is the "most efficient way of managing the balance sheet" and returning cash to shareholders.

However Debenhams shares tumbled by 4.9p, or 8 per cent, to 67.60p.

While Mr Sharp was "cautious about strength of consumer confidence over the next 12 months", he said its new gift ranges had "got off to a good start" ahead of Christmas. He added it will "trade the business as hard as possible".

But for the fashion sector, the ONS data will raise alarm bells. The warm weather at the end of September contributed to textile, clothing and footwear sales volumes tumbling by 2.1 per cent last month – the biggest fall since April 2008.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Attenborough with the primates
tvWhy BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
News
people
News
Campbell: ‘Sometimes you have to be economical with the truth’
newsFormer spin doctor says MPs should study tactics of leading sports figures like José Mourinho
News
news
ebooks
ebooksA special investigation by Andy McSmith
Voices
Lance Corporal Joshua Leakey VC
voicesBeware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Life and Style
Alexander McQueen's AW 2009/10 collection during Paris Fashion Week
fashionMeet the collaborators who helped create the late designer’s notorious spectacles
Sport
football
News
i100
News
Perry says: 'Psychiatrists give help because they need help. You would not be working in mental health if you didn't have a curiosity about how the mind works.'
people
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: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

Alexander McQueen's astonishing vision

Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

Dinner through the decades

A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

Philippa Perry interview

The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

Bill Granger's Indonesian stir-fry recipes

Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

Harry Kane interview

The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?