Debenhams to ramp up own-label home ranges as it drives margins

The department store operator has been growing its own-brand offer to drive margins and notched up an 18.6% increase in pre-tax profit before exceptional items to £123.6m in the first half to February 27.

Debenhams will introduce a homewares range from designer Lisa Stickley, who has created ranges for Anthropologie, Selfridges and Fenwick, called House and Home for autumn.

It will also expand its Designers At home offer. Matthew Williamson will launch a home range for Debenhams in September and glassware, china and cutlery ranges will launch from J by Jasper Conran.

However, despite beating profit expectations during its first half the City reacted coolly to Debenhams’ current trading as like-for-likes rose only 0.3% in the 31 weeks to April 3.

Debenhams deputy chief executive Michael Sharp said the modest increase followed the retailer’s efforts to shift store space to its more lucrative own-brand offer at the expense of its concessions, to drive margins over sales. Debenhams said the ongoing strategy has resulted in a 1.5% hit to like-for-likes over the period.

“We have delivered on what we were telling people we were up to,” said Sharp. “It is a margin story.”

Margins, excluding the acquisition of Danish chain Magasin du Nord in November, rose 140 basis points in the half. For the full year, Debenhams forecast margins to increase by 80 basis points, up from previous expectations of a 50 to 60 basis point rise.

Sales of its Designers At Debenhams ranges soared 17.7% to £282.1m in the half. Own-bought sales increased 9.4% while concessions sales plummeted 22.5%.