Debenhams sales flat as promotions slow in Q3

Debenhams has paid the price for bringing forward sales promotions earlier in the year. Picture: PA

Debenhams has paid the price for bringing forward sales promotions earlier in the year. Picture: PA

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DEBENHAMS has paid the price for bringing forward sales promotions earlier in the year, leading to flat revenues at the department store business in its third trading quarter.

The company revealed that its strategy to phase down its special offers cut like-for-like sales by 1 per cent in the 15 weeks to 13 June.

Debenhams moved many of its promotions into the group’s first half, the result being that there were three fewer days of special offers in the latest trading period.

More positively, the retailer trumpeted a 16.7 per cent rise in online sales – up from 12.7 per cent in the first half – after it upgraded its website and lowered delivery charges.

Michael Sharp, group chief executive, hailed the “good progress” Debenhams had made despite the dip in revenues in Q3, but said that whilst customers recognised the economic recovery “they remain cautious in their spending”.

He added: “We have made further improvements to our multi-channel proposition, including more competitive delivery charges, we have commenced further space trials with a number of exciting new partnerships, and have seen continued progress in our international operations.”

The group has 161 UK stores and 240 overseas outlets. Debenhams said it had reduced the number of days on discount during the past year, and would aim to add variety into its future promotions and give clarity on sales offers for customers.

Debenhams has also been renting out under-used space to new brands to join concessions like Mike Ashley’s Sports Direct in an effort to get more customers through the door.

New partners include Patisserie Valerie, BHS lighting and Chi Kitchen, a pan-Asian cuisine offer from the owners of Mango Tree.

The group said it was on track to fill more than 50 per cent of the one million square feet of under-used space it has identified by April 2016. It is also to open five stores this autumn, in Wandsworth in south London, Bradford, Rugby, Beverley and Newport.

Sharp said overseas outlets were hit by the weak euro, although its Magasin du Nord chain saw good growth thanks to a recovering Danish economy.

Paul Thomas of retail consultancy Retail Remedy said Debenhams had “clearly lost its way” and was losing out to the likes of Marks & Spencer and House of Fraser.

He said: “Debenhams’ sales, much like its image, are stuck in limbo. Given the tired feel of many of its older stores, some will view its flat sales as a modest success.”

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