Big-name operators produce better news for beleaguered retail sector

DEPARTMENT store chain Debenhams and the group behind the fast-growing Superdry fashion brand brought some much-needed cheer to the high street yesterday, with news of buoyant trading and a bullish outlook.

• Like Debenhams, SuperGroup - the name behind the Superdry label - had good news for the troubled high street

Debenhams, Britain's second-biggest department store operator by sales behind John Lewis, said it expected annual profits to rise by around 20 per cent, while SuperGroup - whose trendy brand is favoured by celebrities such as David Beckham - revealed a 60 per cent jump in sales.

The news came amid fears that steps to rein in government borrowing, such as higher taxes and public spending cuts, will dent consumer spending. Discount fashion chain Primark said on Monday sales growth had slowed and profit margins would be hit by higher cotton costs, while a survey yesterday showed consumer morale below its long-run trend.

However, SuperGroup, which had the most successful initial public offering (IPO) so far this year, underlined its status as one of the country's fastest-growing retailers, with first-quarter sales surging 59.8 per cent to 32.8 million.

Julian Dunkerton, the group's founder and chief executive, who along with SuperGroup's other management shared 105m of the 120m IPO proceeds, forecast a successful full year, saying sales of the company's trademark T-shirts, hoodies, check shirts and jogging bottoms should not slow despite tough economic headwinds.

"I see no reason to believe that we will not continue growing in the nature that we have been growing," he said.

"Young people have to look good."

SuperGroup has 49 stand-alone stores and 64 concessions within House of Fraser.

Debenhams, meanwhile, pencilled in underlying profits of about 150m for the year to 28 August, saying that strong sales of its designer ranges, coupled with growth online and overseas, would help it cope in a tough environment for shoppers in coming months.Rob Templeman, chief executive of Debenhams, said: "We have said throughout 2010 that this would be a year of change for Debenhams and a year when the structural shift towards own-bought merchandise means that we will judge our performance on profit improvement rather than sales."

The group - which has 160 stores in Britain and Ireland, six in Denmark and 60 franchised outlets overseas - has concentrated on high-profile designer collections from the likes of Henry Holland and Ben de Lisi - an overhaul that cost it around 1.5 per cent in same-store sales.

Templeman told reporters: "From a sales line, we were on the back foot (in the year just ended] because of all the space moves that we made, whereas this year I think we'll be on the front foot."

He said there would be new "Designers at Debenhams" ranges to sustain growth achieved by lines such as "Butterfly" from Matthew Williamson and Lisa Stickley's "House and Home", as well as more investment in store refurbishments.

Kate Calvert, an analyst at Seymour Pierce, raised her 2010-11 profit forecast 13 per cent to 170m and her investment rating on Debenhams shares to "buy" from "hold". "There is sufficient momentum in the business to deliver further underlying gross margin gains and help offset rising cost of goods inflation," she said.