Behind the Spin - Debenhams

When it comes to retailing, Christmas sorts the pedigree porkers from the runts of the litter. And so the New Year trading updates were nervously awaited: had the festive season's sales made them winners or losers? Rosettes this year to John Lewis, Marks & Spencer and Tesco. Sadly, Debenhams - along with Next, Woolworths and HMV - was a loser. In its January announcement, the department store upset the City by reporting a continuing fall in underlying sales and a decline in gross margin. It experienced a 4% like-for-like sales decrease in the 19 weeks to 13 January. This poor show caused analyst Richard Ratner of Seymour Pierce to cut his full-year profit forecast from £185 million to £177.7 million.

THE SPIN

The 132-store chain blamed the sales decline on unseasonably warm weather and the integration of nine recently acquired Irish Roches stores. These outlets rely on lower-margin concession sales. Respected CEO Rob Templeman (ex-Halfords and ex-Homebase) said Debenhams had bettered its previous trading period's sales performance, but admitted that 'the market remains challenging and we are cautious about the out-turn for the rest of this financial year'.