Debenhams has had a pretty good recession: the retailer said today that its headline profits were up 18.6% to £124m for the six months to February 27, as it continues to re-focus on its own ranges. That said, these numbers paint a pretty flattering picture of its true state – much like the March retail sales figures, in fact. Although the British Retail Consortium reckons sales were up 6.6% on 2009 (or 4.4% on a like-for-like basis), that’s largely because the Easter weekend fell in March this year rather than April. The rest of 2010 is likely to be a long hard slog, both for Debenhams and the high street more generally...
Debenhams boss Rob Templeman was keen to point out today that the retailer had ‘consistently achieved’ its sales, margin and profit targets for 18 months now, which is pretty good going given the recession. Particularly when you consider what a basket case it looked a few years ago – saddled with huge debts (from its time under private equity) and increasingly unpopular with punters, it looked far more likely to fall victim to the recession, rather than coming out the other side in a stronger position. But here it is, beating profit targets again.
That said, the news wasn’t all good today. Although Debenhams’s profits are looking a lot healthier, some of this was due to one-off savings that will be hard to replicate. And while overall sales were up 12%, like-for-likes were basically flat, up a measly 0.3%. The retailer blamed this on the extensive refurbishment programme it’s carrying out across all its UK department stores, in a bid to free up more space for its higher margin own brands. So it should be good for the bottom line in the long term, but it’s clearly hampering sales in the short term. All this – plus Templeman’s rather downbeat forecast for the coming year – helped push its share price down this morning.
Debenhams also said today that its like-for-likes have been growing at the same rate in the period since February 27 – which suggests that it lagged behind the rest of the high street in March, judging by those BRC figures. However, the BRC also noted that if you strip out the effect of the early Easter weekend, the picture looks a lot less healthy – and warned that prospects for the high street remain uncertain. With higher taxes and increased unemployment on the horizon later this year (regardless of who wins the Election), British shoppers are likely to have even less money to fritter away on stuff they don't really need...
In today's bulletin:
How the politicians are skewing the property market
Debenhams cashes in - and Easter boosts high street sales
At last: Twitter has a plan for making money
Ryanair tries to confiscate journo's flat over 'bet'
The Parent Project: Who am I?