Debenhams to make year profit forecasts

Debenhams will meet forecasts for 2012-13 profit after a warmer summer helped sales growth pick-up in its fourth quarter, Britain's No. 2 department store group said this morning.

"Looking forward, we are confident in our strategy but are not expecting any rapid recovery in consumer sentiment and the marketplace remains highly competitive," said chief executive Michael Sharp.

While official data and surveys have shown an improving outlook for UK consumer spending, which generates about two thirds of gross domestic product, retailers remain wary.

Many, including British clothing retailer Next, say consumer spending is likely to remain subdued until wages rise ahead of inflation, which could be over a year away.

Debenhams, which trails employee-owned John Lewis by annual sales, said sales at stores open over a year rose 2 per cent in the year to August 31.

That compares with a flat outcome in the 16 weeks to June 22, its fiscal third quarter, and was in line with analysts’ forecasts.

The 200-year-old firm said it won market share in clothing and non-clothing categories, including womenswear and beauty. Online sales were up 46.2 per cent year-on-year.

Debenhams, which trades from 236 stores across 28 countries, forecast a flat gross margin for the full year, in line with guidance.

Prior to the update analysts were on average forecasting a full year pretax profit of about £153 million (€182 million), down from £158.3 million in 2011-12.

Forecasts had been cut after a profit warning in March that was blamed on January snow.

Shares in Debenhams, up 17 per cent over the last three months, closed yesterday at 103 pence, valuing the business at £1.27 billion.

Reuters