Jubilee gives Debenhams a sales boost

As retailers face challenging times on the high street, Debenhams shrugs off the gloom by reporting a sales rise in its third quarter.

by Elizabeth Anderson
Last Updated: 06 Nov 2012
Debenhams, Britain’s second biggest department store group after John Lewis, beat forecasts by reporting that sales at stores open more than a year rose 3.1% in the four months to the end of June. That compares with a sales rise of 0.3% in the first half of the year.

Despite a rainy April, which retailers blamed for washing away shoppers from the high street, Debenhams focused on reeling them back in over major events. It cashed in over the Diamond Jubilee, as shoppers splurged on bunting and commemorative tea towels. In the week before the celebrations, Debenhams said sales of its Jubilee t-shirts were up 190%.

Debenhams strategy has also been to discount heavily at times of high footfall, such as the Easter weekend, Mother’s day and the end of month pay days as it battles against the challenges on the high street.  

Debenhams’ online sales were up 35%, making it the 11th biggest UK online retailer in terms of traffic. But it’s still punting on the high street picking up. In the next five years, Debenhams plans to open another 14 sites to its 171 stores in the UK, Ireland and Denmark.

Despite today’s positive results, chief executive Michael Sharp is remaining cautious. Whilst he said Debenhams was making ‘good progress’, he added he is unsure about the impact of the Olympics on retailers. And even today’s results came with a sour taste. Whilst toasting a boost in sales, Debenhams admitted these products had a lower profit margin. Sales of health and beauty products rose but clothing sales, particularly in womenswear, dipped. Sharp predicts that group margin for the full year will now be down 30 basis points, compared to previous forecasts it would be broadly flat.

Investors are also undecided about the mixed results. Shares were down by up to 2% in mid-morning trading.

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