Debenhams and eBay: My how their revenues have grown!
By Michael Northcott Thursday, 19 April 2012
The high street and the high bidder: Debenhams and eBay show that retail trends can be bucked.
Anyone thinking of starting an e-commerce website in the near future should be heartened by news today of Debenhams and eBay’s excellent growth.
Debenhams’ like-for-like sales have only increased by a (still respectable) 1.4% to £1.48bn, but the firm’s website revenues have jumped 34%. Although it has not disclosed specific figures for online revenue, this kind of progress for a principally bricks-and-mortar retailer is encouraging given the endless doom-mongering plaguing many high street forecasts lately.
There’ll be more to come, if chief executive Michael Sharp has anything to do with it. The firm is in the process of building 14 stores for this year, and is negotiating another possible 25 sites for expansion. The company is bucking the trend of high-street woes in retail circles, even managing to pay down a hefty £71.9m chunk of its debt, now with only £311.8m to go.
Investors will note, however, that the chain’s gross margins are down 30 basis points, meaning it will need to avoid the danger zone of discounting to the point where the lower prices stick.
On the other side of the pond, eBay announced in its quarterly statement that first-quarter profit was $725m (£453m), up from $619m the year before, and revenue was $3.3bn, a 29% increase in 12 months. For a well-established online retailer with an already enormous market share, this is an impressive increase.
So, things may look bleak in some quarters of the economy, but retailers both online and offline can still do well.