Debenhams sticks to its guns over Christmas promotions

In the past the department store group has raised eyebrows with its seasonal spectaculars and been accused of encouraging shoppers to hang on for price cuts.

But deputy chief executive Michael Sharp said: “We plan to be just as promotional as last year. It’s not something we apologise for and we’re actually less promotional than people think.”

He said part of the retailer’s appeal came from its value-for-money promotions, which customers liked, and that the retailer’s events were planned a year in advance.

Because Christmas Day falls on a Saturday this year, Sharp thinks the Christmas rush will come late. “The last week will be massive”, he said.

Debenhams reported a 20.6% rise in full-year headline profits to £151m on sales up 9.6% to £2.56bn. Like-for-likes were flat, held back by the shift to own-bought product, which delivers better margin but lower sales densities.

In the coming year the retailer intends to expand its Designers at Debenhams business - there are particular opportunities in accessories and home categories, Sharp said - and is launching Edition, created to promote young designers in a boutique-style in-store environment. He said property market conditions might also create opportunities to expand the Desire chain more quickly.

Seymour Pierce analyst Kate Calvert said Debenhams’ full-year performance was in line with expectations but cautioned: “Management needs to show it can generate like-for-like growth. We believe there is enough momentum within Designers at Debenhams to achieve this in 2011.”

Panmure Gordon analyst Jean Roche welcomed “positive signs” but warned: “We think the macro risk to Debenhams’ sales from public sector pay freezes and job cuts is relatively greater than for Next and Marks & Spencer, for example.”