Upbeat debut for Debenhams' Earl despite £9m profits fall

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The Independent Online

Belinda Earl, the new chief executive of Debenhams, yesterday provided an upbeat outlook for the department store chain despite a £9m drop in full-year profits.

Belinda Earl, the new chief executive of Debenhams, yesterday provided an upbeat outlook for the department store chain despite a £9m drop in full-year profits.

Shares in the company closed up 9.4 per cent at 194.25p after news of stronger-than-expected current trading offset a slip in pre-tax profit to £129.6m in the year to 26 August, against £138.8m the previous year. The fall was the result of increased spending on the internet, home shopping and advertising campaigns.

Turnover in the period rose 1.4 per cent to £1.4bn, while like-for-like sales were up by 1.8 per cent. In the first seven weeks of the current financial year, total turnover grew by 11.5 per cent and like-for-like sales increased by 7.5 per cent.

Ms Earl, a former trading director, took over as chief executive last month following the shock departure of Terry Green. He quit Debenhams to run the Bhs chain, which is being revamped under the ownership of the retail entrepreneur, Philip Green.

In her first public appearance as head of the department stores group.

Rowan Morgan, an analyst at Lehman Brothers, said: "Belinda came across very well.... But what she was reporting on was, in effect, the legacy of Terry Green. Whether she is strong enough to take up the mantle going forward remains to be seen."

Debenhams pumped £6m into its new business division in the full-year period and opened four UK stores. The home shopping unit is forecast to break even in three years while e-commerce is expected to take five years to move out of the red.

Ms Earl said Debenhams would take advantage of changing consumer trends by focusing on areas such as health and beauty and audiovisual equipment, where demand over the next five years is forecast to rise by 28 per cent and 30 per cent respectively.

She added that the company's wedding list service is now the biggest in the UK, with 20 per cent of the total market. Debenhams expects to coordinate gifts for 32,000 marriages this year.

Debenhams increased its market share of the department store market to more than 13 per cent in the full-year period, according to research carried out by retail consultancy Verdict. Under its current expansion plan, the company will have 103 sites open by 2004.

Matthew McEachran, an analyst at Investec Henderson Crosthwaite, said: "They are firing on all cylinders. Having built up their gross margins [which recorded a gain of 0.5 per cent in the period], they are now looking to take market share." Debenhams has been able to steal customers from mid-market retailers such as Marks & Spencer by stepping up its product offering. The group increased its share of the lingerie market to 4.8 per cent from 3.7 per cent in the full-year.

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