Debenhams shares rise as results beat expectations

Debenhams store in Central London
Debenhams continues to benefit from growing online sales

Debenhams has posted positive results for the first half of its financial year, beating analysts’ expectations.

The company’s share price rose 6.6%, reaching a 15-month high, after the retailer reported profit before tax rose 4.3% to £88.9m for the 26 weeks to 28 February.

Debenhams said its focus on online delivery – up 12.7% – was part of its success. 

The company has also cut its debt by £62.4m, to £297.3m.

Bryan Roberts from Kantar Retail analysts said: “These numbers mark something of a pleasant surprise, with half-year earnings ahead of expectations and the company seemingly doing a better job of managing its frenetic schedule of promotions and discounts. “

The news comes despite a share price fall after the Christmas period.

Debenhams said it would continue with its current strategy for sustainable growth in the longer term. It also said it had cut down the amount it spent on promotions.

“Overall we delivered a good first-half performance, despite a difficult clothing season in autumn and we are on track to achieve full-year expectations,” said chief executive Michael Sharp.

“We are continuing to plan prudently in the near term, while remaining focused on our strategic priorities.”

Debenhams – Britain’s second-largest department store chain – said almost half of its online sales were placed through a mobile phone or tablet. 

But this is not necessarily good news, say experts.

Retail analyst Freddie George from Cantor Fitzgerald warned: “We remain concerned that the department stores are capital-intensive and need to be furbished to a higher standard to attract shoppers. 

“We also believe there is a growing cost to the business from growing its online operations.”

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Posted on April 17, 2015, in #retail, #uk. Bookmark the permalink. Leave a comment.

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