Debenhams jobs boost as it reveals 'positive trends'

DEBENHAMS yesterday bucked the doom and gloom in the retail sector by saying it expected to create 600 jobs as part of plans to refit a string of stores.

Details of the investment programme, which will take place in the group's coming financial year, emerged as Debenhams said it continued to make progress despite "significant headwinds" on the high street.

The firm said it was particularly pleased with trends over the past two months as strong sales of cosmetics and fragrances and rapidly increasing online trade drove like-for-like sales excluding VAT up by 1.5 per cent since February.

Debenhams - which has 169 stores in the UK, Ireland and Denmark - is currently working on six stores refits, in addition to the five already completed this year in Glasgow, Leeds, Manchester, Merryhill and Romford.

It said yesterday that it expected to refit a further 20 outlets in the financial year starting at the end of August, including shops at Bournemouth, Harrogate, Hull, Preston and Reading.

The 1.5 per cent improvement in like-for-like sales compares with a decline of 1.5 per cent over the previous half year.

Debenhams, which also has 64 franchised outlets in 25 countries, hailed the performance of recent additions to its ranges, including Principles by Ben de Lisi and H! by Henry Holland, and said the first 500,000 downloads for its iPhone app delivered 1 million of sales.

It is facing cost pressures in its supply chain and has sacrificed some margin in order to drive sales growth, but overall the group said it continued to believe that profits for the year will be in line with expectations.

Chief executive Rob Templeman said: "We are continuing to make progress despite significant headwinds in the sector and are pleased with the performance of the business in the year so far."

Investec Securities left its pre-tax profits forecast unchanged at 160m, up from the 151m reported last year, and said the update from the chain looked reassuring.

Singer Capital Markets analyst Matthew McEachran added: "Although top line (sales] has improved to a creditable level, margin has been invested to achieve this… As a consequence, forecasts don't move ahead."

Consumers are grappling with rising prices - particularly in fuel and utilities - subdued wage growth, a tougher credit backdrop, government cutbacks and fears of interest rate rises. This has triggered a spate of retail failures, including home furnishings group Habitat UK, Moben Kitchens-owner Homeform, discount department store TJ Hughes and fashion retailer Jane Norman, which had concessions in Debenhams stores.

Templeman, who will retire in September to be succeeded by deputy chief executive Michael Sharp, said he expected some easing of inflationary pressures in late spring 2012, due to commodity price falls and currency gains working through the supply chain.

He added the firm has not yet spoken to the administrator of Jane Norman. There has been speculation Debenhams may buy some residual stock. The department store business, ranked second after employee-owned rival John Lewis,, forecast year-end net debt of about 400m.