Debenhams Regulatory News (DEB)

12 Jan 2010 07:00



12 January 2010 

DEBENHAMS plc - INTERIM MANAGEMENT STATEMENT

Debenhams plc, the leading department stores group, today releases its interim management statement for the year-to-date. This covers the 18 weeks ended 2 January 2010.

Gross transaction value (excluding the recent acquisition of Magasin du Nord) for the 18 weeks  was 1.6% higher than the same period last year.

Like-for-like sales increased by 0.1% over last year, which was in line with our internal forecast. This includes the previously advised impact of lower sales densities resulting from the strategy of moving space away from concessions and into own bought merchandise which has had the effect of reducing like-for-like sales by c.1.5% since the beginning of the financial year. 

Progress continues to be made in terms of market share, particularly in relation to menswear,  childrenswear (source: TNS Worldpanel Fashion 24 weeks market share data to 8 November  2009 vs. 2008) and home (source: GFK).

Gross margin year-to-date has been particularly pleasing and has improved significantly over the corresponding period last year. The gross margin improvement has been achieved through our strategy of focusing on the drivers of cash gross profit, principally by repositioning our product offer towards a higher mix of own bought ranges as well as lower markdown.

Stocks continue to be tightly controlled. Terminal stocks are forecast to be within 2.75% to 3.00% at the half year.

We are continuing to invest in the future growth of the business. Following the success of the recent refit of the Cardiff store, we will be accelerating the store refit programme as well as investing in more brand make-overs across the whole store portfolio. This investment, in addition to the acquisition of Magasin du Nord, will result in capital expenditure guidance for the year increasing to c.£115 million.

Cash generation during the year to date has been in line with forecast. As a consequence, an additional voluntary repayment of £75 million of gross debt has taken place. A further £17 million in market buybacks of debt have also been achieved since the October 2009 full year results announcement, bringing the total market buybacks to £78.4 million, purchased at an aggregate discount of c.5%. Adjusting for the higher capital expenditure guidance and additional debt repayment and buybacks, net debt at year-end is expected to be within the range of market forecasts.

On 12 November 2009, Debenhams announced the purchase of six stores in Denmark through the acquisition of A/S Th. Wessell & Vett, Magasin du Nord ("Magasin du Nord"), the leading Danish department store chain. We were pleased with the trading performance of the Magasin du Nord stores over the Christmas period which met our expectations. The completion of the acquisition is expected to be finalised over the next few weeks and we will update the market on the trading performance and our business plans for Magasin du Nord at our interim results presentation.

During the 18 week period, three new Desire by Debenhams stores were opened in Kidderminster, Monks Cross and Witney. Three new department stores are scheduled to open in the remainder of the year in Newcastle-upon-Tyne, Carmarthen and Bury. In addition, an international franchise store has opened in Vietnam.

Rob Templeman, Chief Executive of Debenhams, said:

"We are pleased with our overall performance in the first 18 weeks of the year which was in line with our own forecast. Our continued focus on cash margin means that for the second year in succession we have delivered an increase in profit before tax over the Christmas trading period. 

"Looking forward, with the rise in VAT and a general election pending, the consumer environment remains uncertain and difficult to predict. Against this backdrop, we will continue to execute our strategy of improving gross margins through the expansion of our successful and exclusive Designers at Debenhams ranges. The launch of our new ranges Principles by Ben de Lisi and H! by Henry Holland will give customers an even greater choice within our Designer ranges.  We believe that the strength of our own bought offer will enable us to expand gross margins throughout the remainder of this year."

Debenhams' interim results for the 26 weeks ending 27 February 2010 will be announced on 13 April 2010.

A conference call for analysts and investors will be held today at 8:30am. To join this call, please dial +44 (0) 20 8609 0581. A recording will be available for seven days on +44 (0) 20 8609 0289, PIN 279390#.

Enquiries

Analysts/Shareholders

Debenhams plc

Rob Templeman, Chief Executive

Chris Woodhouse, Finance Director

Lisa Williams, Investor Relations 020 7408 3304/07908 483841

Media

Financial Dynamics

Jonathon Brill 020 7269 7170

Billy Clegg 020 7269 7157

Caroline Stewart 020 7269 7227

Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences and prospects are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect Debenhams' current expectations concerning future events and actual results may differ materially from current expectations or historical results. Any such forward-looking statements are subject to various risks and uncertainties, including: Debenhams' ability to predict customer preferences and demands accurately; the effectiveness of Debenhams' brand awareness and marketing programmes; the occurrence of weak sales during peak selling seasons or extreme or unseasonal weather conditions; difficult market conditions and fragile consumer confidence; competitive factors in the highly competitive retail industry; Debenhams' ability to successfully implement its new store rollout and department store refurbishment strategy; Debenhams' ability to maintain its relationships with certain designers and its significant concession partners; and currency fluctuations and currency risk.

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Additional risk factors that you may want to consider are: Debenhams' ability to retain key management and personnel; disruptions or other adverse events affecting Debenhams' relationship with its major suppliers or its store card provider; factors outside Debenhams' control, such as changes in the financial or equity markets, adverse economic conditions or a downturn in the retail industry, or damage or interruptions due to operational disruption, natural disaster, war or terrorist activity; and work stoppages; slowdowns or strikes.

Notes to Editors

Debenhams is a leading department stores group with a strong presence in key product categories including Womenswear, Menswear, Childrenswear, Home and Health and Beauty. Debenhams is the second largest department store chain in the UK.

Debenhams has a total of 144 department stores in the UK and the Republic of Ireland and 13 Desire by Debenhams stores, which is a small store concept featuring a mix of womenswear, accessories, lingerie, cosmetics and childrenswear. Debenhams has 50 international franchise stores in 18 countries and an online store, www.debenhams.com, through which much of the Debenhams range is available.

Designers at Debenhams include Ted Baker, Jasper Conran, Erickson Beamon, Pip Hackett, Henry Holland, Betty Jackson, Ben de Lisi, Julien Macdonald, Melissa Odabash, Jane Packer, Pearce Fionda, Janet Reger, John Rocha and Matthew Williamson.