Debenhams boosted by a summer of discounts and promotions

New chief executive Michael Sharp, who succeeded Rob Templeman earlier this month, described the group as one of the high street’s “winners” as he unveiled a sales turnaround.

He pointed to top-line growth of 0.4 per cent on a like-for-like basis in the nine weeks to 27 August, reversing a fall of 0.4 per cent over the previous 43 weeks.

During the period, Debenhams started its summer sale five days early to steal a march on rivals, helping it enter the autumn season with low stock levels.

The group said gross margin for the full-year may be slightly down as a result of the discounting and competitive pricing, but the additional sales generated will help push profits for the year above City forecasts for a 5 per cent increase to £158 million.

The strategy helped the chain boost its market share of clothing and premium health and beauty products.

Finance director Chris Woodhouse said he expected a new profit consensus to settle at about £164m.

Year-end debt would be about £385m, the retailer added, down £130m since the start of the year and compared with previous guidance for about £400m.

Debenhams – which has 169 stores in the UK, Ireland and Denmark – did not provide a breakdown of sales figures for the British business, but said its Magasin du Nord chain in Denmark saw sales growth of 4.8 per cent, indicating the UK performance may have been weaker.

Sharp said the group had kept its prices competitive while also running special offers and sales. He added: “In this sort of market there are inevitably winners and losers, and I believe Debenhams is well positioned to continue to be one of the winners.”

The firm’s “Spectacular” promotions, where prices are cut by up to 25 per cent across the store, have also proved increasingly popular, Sharp noted.

Profits have been boosted in recent years by the firm’s focus on selling its own label and “Designers at Debenhams” ranges, which sees the likes of Jasper Conran and Henry Holland produce exclusive lines.

Debenhams has put up prices by an average of 5 per cent in its current autumn range in response to high commodity prices, particularly cotton.

But it said it would up prices by less next year after commodity price inflation began to ease.

The chain plans to accelerate its store refit programme, with six stores due to be completed in the coming weeks ahead of plans for a further 20 next year. It will overhaul its flagship store on Oxford Street in London in 2013, moving its head office from Welbeck Street to the same site.

Numis analyst Andrew Wade said: “Debenhams was boosted by a consumer increasingly reliant on activity as a ‘call to action’, which suits Debenhams’ promotional-led style.”