Debenhams cheers high street as profits jump again

The department store chain has had its sixth profitable half-year in a row - and it reckons cotton prices are about to drop.

by Emma Haslett
Last Updated: 06 Nov 2012
Wintertime, and the livin' is easy, as Gershwin didn't say. Well, for Debenhams, at least: the department store chain has just reported some very encouraging half-year results, with pre-tax profits in the six months to the end of February rising to £125.3m, up from £114.5m during the same period the year before. Also unlike Gershwin, the retailer isn't expecting cotton (prices) to stay high. That may not have been great news for Porgy and Bess – but for the UK high street and its customers, it’s hopefully a positive sign.

It was a tough start to the year for Debenhams, which lost £30m worth of sales thanks to the snow at Christmas. But it seems to have bounced back: not only were profits up by 10% from the same period last year, but revenues were also up (albeit marginally), from £1.1bn to £1.2bn. And, as seems to be the case with plenty of retailers at the moment, Debenhams Direct, its online offering, performed particularly well, with sales up 82%.

That reasonably strong performance wasn’t the only surprise: CEO Rob Templeman also announced his departure, after eight years in the top job. The man to take over the reins in September will be his deputy, Michael Sharp - so the company clearly has a pretty solid succession plan in place. And Templeman was quick to assert that he’ll be around in an advisory capacity for another year or so, to make sure things run smoothly.

At least Templeman will leave Debenhams on something of a high. Not only has it just had its sixth consecutive profitable half-year, but if he’s right and those pesky cotton prices do start to fall, it will reduce the pressure on clothing retailers as a whole. And, since clothing prices can be a factor in inflation, that’s going to be music to the ears of the Bank of England, since it tends to support Mervyn King's view that inflation will begin to drop of its own accord, without the need to hike interest rates.

It’ll also ease the squeeze on consumers, many of whom have been holding off spending over the last few months. So, to channel George again, it might make your daddy a bit richer (though it won't do anything for your ma's good looks).

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