Debenhams blames snow for first-half profits fall

The department store group warned the market last month that its profits would be impacted.

Debenhams’ like-for-likes rose 3.1% while gross transaction value was up 3.5% to £1.53bn in the half year to March 2.

However, group gross margin was down 20 basis points over the half as the retailer resorted to discounting to recover sales lost because of the snow and also over the Christmas period, which it said was “highly promotional” across the high street.

Debenhams chief executive Michael Sharp said: “We made progress during the first half although snow in late January meant we did not achieve the profit outcome we had expected. 

“We expect to make further progress in the second half despite consumer sentiment remaining weak and challenging market conditions.  We are committed to the opportunities afforded to us by the four pillars of our strategy to build a leading international, multichannel brand.”

Online sales were up 46% to £194.4m and now account for 12.7% of total sales.

Debenhams this month hired Argos multichannel boss Ross Clemmow to lead its ecommerce business.  The retailer is working to improve its online proposition and will be able to offer next-day delivery by Christmas.

Debenhams said it had grown its fashion share by 10 basis points, according to the latest data by Kantar Worldpanel for the 24 weeks to March 17, while its beauty share advanced 50 basis points. It has recently introduced milliner Stephen Jones and men’s tailor Patrick Grant to its Designers at Debenhams portfolio. It aims to build its Designer sales to £750m in the medium term.

International gross transactional value was up 1.6% to £280m over the half, although EBITDA overseas dipped 1.4% to £27.9m.

In Denmark, Magasin’s like-for-like sales increased 9.8% in local currency, but its Romanian franchise partner closed six stores because of “an extremely difficult market”.  The closures resulted in a write-off of £3.8m.