1 Jul 2010 07:00
1 July 2010
DEBENHAMS PLC - INTERIM MANAGEMENT STATEMENT
Debenhams plc, the leading department store group, today provides the following interim management statement for the 42 weeks to 19 June 2010.
Financial Performance
Gross transaction value for the period increased by 8.9% compared with the previous year including Magasin du Nord ("Magasin") and by 1.1% excluding Magasin. Like-for-like sales decreased by 0.4% over the 42 weeks. Like-for-like sales continued to be impacted by c.1.5% due to the strategy of improving gross margins by increasing the penetration of own bought trading space, which was predominantly undertaken in the fourth quarter of 2009, and by stronger comparatives in the third quarter of 2009.
We continue to make market share gains, particularly in menswear and childrenswear which have seen share gains of 20 basis points and 40 basis points respectively (source: Kantar Worldpanel Fashion 24 weeks market share data to 23 May 2010 vs. 2009). Womenswear share continues to be impacted by lower own bought sales densities.
Gross margin performance has been strong, driven by the performance of own bought ranges and our focus on tight stock control and markdown management in light of fragile consumer confidence. As a result of this, gross margin for the year is now expected to exceed our previous guidance of an increase of 80 basis points excluding Magasin and flat including Magasin.
Magasin continues to perform in line with our expectations and we are encouraged by the customer reaction to the introduction of Debenhams' own bought ranges into the stores. The Field's and Odense stores which have the highest proportion of Debenhams merchandise are showing good early signs of success. Consequently, we are confident in reiterating the guidance for Magasin set out at the interim results in April.
Strategy Update
We have made further progress against our four key strategic themes: product strategy, multi-channel, new stores and store refurbishments and balance sheet.
Product Strategy
The new Designers at Debenhams ranges Principles by Ben de Lisi and H! by Henry Holland have been well received by customers and have performed in line with our expectations.
As part of our strategy to increase own bought sales penetration, we have reached agreement in principle to buy the Faith footwear concession business in Debenhams stores from the administrators of Faith subject to contract. There are 115 Faith concessions in Debenhams stores.
Multi-Channel
The multi-channel business continues to grow strongly with sales for the 42 week period up 90% compared with the previous year. In store ordering, collect-from-store and international delivery are all proving popular with customers.
New Space and Store Refurbishments
One department store has been opened during the second half in Carmarthen taking the current portfolio to 146 department stores, 13 Desire stores and six Magasin stores. One further department store is scheduled to open before the end of the financial year in Bury, Greater Manchester in July. In addition, six international franchise stores have opened in Azerbaijan, Egypt, Malaysia, Malta, Slovakia and the UAE during the second half with a further two expected before year-end.
The store refurbishment programme is continuing with four major refurbishments underway, including the city centre stores in Glasgow and Manchester, which are due to be completed by the end of the financial year.
Balance Sheet
The process of refinancing Debenhams' debt facilities is progressing well and we expect this to be completed within the next few weeks, well ahead of the scheduled date of April 2011. We will provide the market with details of the refinancing when it has been completed but the current expectation is that it is likely to have a positive impact on the interest charge from the financial year 2011.
Rob Templeman, Chief Executive of Debenhams, said:
"We are pleased with the performance of the business so far this year and we continue to make progress in delivering our strategy of improving margins and profits through increasing the own bought element of our sales mix. 2010 has been a year of change for Debenhams and a year when we will judge the performance of the business on profit improvement.
"Looking forward across the balance of the year, we remain cautious about the strength of the overall retail market and the level of consumer confidence. However, we believe that our focus on self-help levers - including increasing gross margin through higher own bought sales penetration, the recent acquisition of Magasin du Nord, our growing multi-channel business and the ongoing store refurbishment programme - will help to mitigate the macro-economic pressures and enable Debenhams to make further progress over the coming year."
Note: Debenhams plc acquired Magasin du Nord, the leading department store chain in Denmark, during the first half of the current financial year. Magasin is included in Debenhams' results from 7 November 2009.
A conference call for investors and analysts will be held today at 9:00am. To join this call, please dial +44 (0)20 7906 8567. A recording of the call will be available for seven days on +44 (0)20 3364 5943 or +1 866 286 6997, replay code 269439#.
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.
Enquiries
Investors and analysts
Debenhams plc
Rob Templeman, Chief Executive
Chris Woodhouse, Finance Director
Lisa Williams, Investor Relations 020 7408 3304, 07908 483841
Press
Financial Dynamics
Jonathon Brill 020 7269 7170
Billy Clegg 020 7269 7157
Caroline Stewart 020 7269 7227
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 operates 165 stores in the UK, Republic of Ireland and Denmark, comprising 152 full departments stores and 13 Desire by Debenhams stores, which is a small store concept featuring an edited product range. Debenhams also has 58 international franchise stores in 22 countries. Debenhams' online store is available at www.debenhams.com.
Designers at Debenhams include Ted Baker, Jeff Banks, Jasper Conran, Erickson Beamon, FrostFrench, Henry Holland, Betty Jackson, Ben de Lisi, Julien Macdonald, Melissa Odabash, Jane Packer, Pearce Fionda, Janet Reger, John Rocha, Lisa Stickley, Eric Van Peterson and Matthew Williamson.