Debenhams is still not out of the woods

The department store hasn't shaken its reputation for never-ending sales.

by Rachel Savage
Last Updated: 22 Oct 2015

Debenhams has been stuck in the middle lately, much like Tesco and the other large supermarkets and rival Marks & Spencer. Caught between cheap fast fashion from the likes of Primark and slicker upmarket offerings, the department store’s sales have struggled.

Results out today are better than investors were expecting, but not exactly the picture of renaissance. Like-for-like sales in the 15 weeks to June 13 were flat as a pair of ballerina shoes, compared to analyst expectations of a fall of 1-2%. Over three quarters sales were marginally better, up 0.9%.

And there were even some bright spots. Stripping out pesky currency swings, like-for-like sales actually rose 2.1% in the third quarter, although that was down from 2.4% in the retailer’s first half. Online sales, meanwhile, marched on, up 16.7% in the 15-week period.

Investors gave the results a barely perceptible nod of approval: shares rose around 0.9% to 91p in early trading. They’ve actually not done too shabbily over the last year either, having risen a respectable 31%.

But just doing a bit better than expected is not a winning formula. ‘You can’t help feeling that in many instances the once venerable brand is living on borrowed time,’ as Retail Remedy’s Paul Thomas put it.

‘Faced with a resurgent M&S and a strong House of Fraser that are consistently luring away its core customers, Debenhams has become heavily reliant on promotions,’ he said. ‘This is both unsustainable and eats into profits.’

Chief executive Michael Sharp has pledged to get Debenhams out of the vicious cycle of never-ending sales. But it still hasn’t shaken its reputation – and as all retailers know, reputation is everything.

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