Debenhams margins hit by spring showers

Date: Thursday 28 Jun 2012

Department store chain Debenhams has been boosted by big events like the diamond jubilee and the Easter bank holiday, according to a trading update on Thursday, although the firm cautioned that margins have been hit by recent bad weather.

Like-for-like sales grew 3% between March 4th and June 23rd - this was an acceleration over the first six months of the group’s financial year which begins in September.

Debenham’s Chief Executive, Michael Sharp, said he was “particularly pleased” with the like-for-like sales trends.

The difficulty for the company, though, has been the weather. With Britain experiencing Noah’s-flood-type conditions, the punters haven’t been quite as keen on buying summery dresses.

Health and beauty sales have partly offset the decline in fashion but the margin on those type of products is not as great as clothing. Debenhams therefore says its gross margin for the full year will be 30 basis points below 2010/11.

This probably explains why Debenham’s shares were down 1.6% by 10:31.

BS

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