Debenhams reports solid results over Christmas trading
The retailer reported a five per cent growth in its group like-for-like sales over Christmas and a 17 per cent jump on its online sales.
On a constant currency basis, like-for-like sales edged up 1.7 per cent in the seven weeks to January 7. For the 18-week period group like-for-like sales saw a 3.5 per cent increase, or 0.5 per cent, on a constant currency basis.
Maureen Hinton, global research director at Verdict Retail, said Debenhams is yet another retailer to demonstrate UK shoppers were still willing to spend at Christmas.
“For the department store having less dependence on fashion has proved a real asset,” Hinton said. “It had less promotional activity, despite the challenging clothing market, with fewer clothing options and seven per cent less stock.”
Markdowns reduced and there was a two per cent improvement in full price sell through which will have helped its margins. “As a result, its non-clothing categories have risen from 52 per cent to 57 per cent of the sales mix during this period,” Hinton said.
According to Hinton, beauty is a major gifting category at Christmas, as it drives both sales and footfall into stores offering the opportunity to upsell other products. It also has the benefit of an efficient, integrated online business, which worked well during the Black Friday and Christmas periods.
“With BHS out of the market Debenhams, M&S and Next should have picked up some of its sales to help boost their performance,” she said. “However out of this triumvirate of midmarket operators, Next has proved to be weakest link this year and also underlines the difficulties in the clothing market – gains are at the expense of competitors rather than increased spending from the consumer.”
She added Debenhams’ strategy to shift its focus onto beauty, gifting and home, as well as adding to its food service offer, will strengthen its capabilities to match changing consumer demand.
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