Debenhams confident about Christmas despite lower FY profits
Department store group Debenhams reported a better second half and said it was confident about Christmas, although annual profits still fell.
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Debenhams
1.83p
15:45 08/04/19
Debenhams said it achieved higher full-price sales and fewer days of product promotions in the second half, resulting in better gross margins. It also started to make better use of its shop space and had improved its online delivery service.
Group like-for-like sales rose 1% in the 52 weeks to 30 August but operating profit fell 17.2%, with a 22.9% fall in the first half partly offset by a 2.9% rise in the second. Underlying profit before tax was down 20.6% at £110.3m while reported profit before tax fell 23.9% to £105.8m.
Online sales rose 17.6%, representing 15.3% of group sales, while online underlying pre-tax earnings increased 20.5%.
Chief executive Michael Sharp pointed to the fact that second half operating profit was up on a year ago, but warned that markets were still difficult.
"Customers tell us that although they are encouraged by economic improvements this has yet to translate into higher disposable income and the market remains tough," he said.
"We therefore remain cautious about the outlook and will continue to plan prudently. Whilst this has been a challenging year for Debenhams, the brand is strong and our improved second half performance gives us confidence that we are ready for the key Christmas period."
Underlying earnings per share were down 19.6% to 7.4p while on a reported basis they dropped 22.8% to 7.1p.
The group issued a final dividend of 2.4p per share, resulting in an unchanged full year dividend of 3.4p per share.
Net debt improved by £10.5m to £361.5m and borrowing facilities were refinanced including the issue of £225m of 5.25% seven-year senior notes.