Saturday 20 January 2018

Debenhams set for sales rebound from warmer temperatures

John Collingridge and Holly Williams

Debenhams should reap a sales boost from the impact of the warmer summer on seasonal fashion lines when it updates on recent trading on Tuesday.

The department store chain will report back on trading since late June, with surging temperatures expected to have lifted sales after a weather-hit spring.

The update, which comes ahead of full annual results due out next month, follows a lacklustre March-to-June period for the chain of about 240 stores.

Like-for-like sales were flat as freezing temperatures and weak consumer confidence kept shoppers away and left seasonal clothing lines stuck on its shelves.

But analysts at Nomura expect Debenhams to post underlying sales growth of 2.1pc for the year to the start of September, as improved recent trading helps compensate for the spring slump.

They see like-for-like sales between late June and early September also increasing by 2.1pc, with cost cuts in stores and more online efficiency underpinning profits.

Nomura cited recent research from consultancy Kantar which suggest Debenhams' clothing sales have "rebounded sharply".

They said: "Given that Debenhams generates just under half of its sales from clothing, we expect this data to be indicative of better trading although it cannot provide a full picture."

Looking ahead, Nomura warns that a resurgent Marks & Spencer poses challenges for the retailer, after its rival's star-studded autumn/winter clothing launch.

For the full-year, analysts on average see the chain's pre-tax profits dipping to £153m (€182m) from £158.3m a year earlier.

Online sales are also expected to play a major part in Debenhams' progress, after they grew by 40pc in its third quarter.

Press Association

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