Debenhams' retreat from fashion market boosts sales

Trading director Suzanne Harlow said clothing was “particularly challenging”, which had driven the decision to grow other categories, in particular beauty and gifting.

Kantar Worldpanel revealed this morning that fashion market sales fell 2% in the year to December 18, its biggest decline since August 2009.

This has knocked nearly £750m off total fashion sales over the year.

Debenhams made headway on its strategy to reduce dependency on fashion to offset this. Non-clothing grew to 57% of the sales mix over the 18 weeks to January 7, up from 52% in its last financial year.

Beauty boost

Beauty sales were up 4% year-on-year over Christmas at Debenhams. According to new chief executive Sergio Bucher, eyeshadow palettes were the top seller, with 300,000 sold over the festive period.

Harlow said Debenhams had achieved “strong market growth” in relation to make-up and now had 34% market share in premium make-up.

Verdict global research director Maureen Hinton said: “Having less dependence on fashion has proved a real asset. [Debenhams] had less promotional activity, despite the challenging clothing market, with fewer clothing options and 7% less stock.”

“Its strength in beauty is a key benefit as beauty, in particular fragrance, is a major gifting category at Christmas, and not only drives sales but also drives footfall into stores, offering the opportunity to upsell other products.

Margins and prices hold firm

Debenhams’ full-year profit guidance was maintained despite the growth in beauty, which holds a lower margin than clothing.

Finance boss Matt Smith said its margin would not be impacted by the strong US dollar in its current financial year, adding that it was fully hedged until the end of August. 

This morning Primark warned that its operating profit margin would decline over the year in the face of the strong US dollar.

Meanwhile, Debenhams vowed prices would not rise in its current year. This contrasts with Next and John Lewis, which have both previously warned that prices would rise in 2017 in the face of currency devaluation.

Harlow said: “There will be no price movement this year. However, value is more important than price for our customers. They’re willing to trade up.”