Debenhams posts best ever December sales

The department store retailer said with Christmas Day falling on a Tuesday, it expected shoppers to buy later in the season, which is why it recorded its highest ever December sales.

Debenhams increased its promotional activity before Christmas this year, as it said the high street was more promotional than the previous year. It said it now expects gross margin for the year to be 10 basis points higher than last year rather than the 20 basis points as previously guided.

Debenhams added that stock levels are “firmly under control”.

In the 18 weeks to January 5 like-for-like sales advanced 2.9% and online sales rocketed 39%, trading ahead of expectations. Online took a bigger proportion of total sales this year, accounting for 12.6% of total sales against 9.3% in the previous year.

This higher than anticipated growth in online sales is expected to increase costs of warehousing and distribution to 3.5% rather than previous guidance of 3.2%.

Debenhams chief executive Michael Sharp said he was “pleased” with the retailer’s trading in the first four months of the financial year.

But he cautioned: “We continue to believe that whilst consumers have become acclimatised to the new economic reality, we don’t anticipate a significant change in consumer confidence in the remainder of the year. We remain committed to prudent investment in key areas of the business to deliver long-term sustainable growth as well as driving shareholder value.”

Debenhams store numbers hit 155 in the period after opening Chesterfield, the retailer’s first full department store on a retail park, which has been one of its “most successful launches ever”.

It plans to start work on five new stores this month and refurnishment of its Oxford Street store will accelerate later this month when scaffolding is erected. Some disruption is expected at the store, while one-off costs are expected related to head office relocation.

Debenhams said it was on track to grow the number of international franchise stores to 150 over the next five years, opening five new stores in the 18-week period, taking the total number to 73. These store openings included its first shops in Bulgaria and Georgia.