Debenhams full-year profits fall 2.7% as it remains 'cautious' of recovery

In the year to August 31 the department store retailer’s pre-tax profit fell 2.7% to £154m largely because of flat operating profit, which was hit by costs across stores and online.

Group sales jumped 2.5% to £2.78bn. UK sales rose 2.3% to £2.25bn and international sales increased 3.7% to £522m.

Like-for-like sales jumped 2%.

Debenhams, which operates 156 UK stores, said group gross margin was flat. Gross transaction value increased 2.5%, comprising a 2.3% increase in the UK and a 3.7% increase internationally.

Debenhams chief executive Michael Sharp said he was pleased with the performance in the “very difficult conditions” and that “we remain cautious about the strength and pace” of a consumer recovery in 2014.

He added: “We gained market share in key categories, demonstrating the competitiveness of our product offer. We continue to deliver growth and additional customer benefits through our strong multichannel capabilities. At the same time, we are working hard to ensure our UK stores adapt to the challenge of their changing role in a multichannel world.”

In the year Debenhams gained market share across clothing and non-clothing product categories in stores and online. 

Online sales surged 46.2% to £366.3m, representing 13.2% of group sales.

Internationally, Debenhams-owned Danish department store group Magasin Du Nord’s like-for-likes jumped 7.2%.

Sharp added: “More widely, whilst consumer confidence may be showing signs of improvement, we expect that household incomes will remain under pressure from inflation growing ahead of wages. With this in mind, we remain cautious about the strength and pace of any consumer recovery in 2014 and expect the marketplace to remain highly competitive.”

But Sharp said he remained “confident” in the four-pillar strategy for the business and is “excited” about the relaunch of its Oxford Street flagship in December and celebrating Debenhams’ 200^th anniversary.

Debenhams plans to open four stores in 2014 in Cheshire Oaks, Haverfordwest, Hereford and Leamington Spa.