Good Christmas for Debenhams but questions remain

Debenhams said that the autumn clothing market had been challenging. Picture: PA

The group, which has 248 stores in 28 countries, lifted like-for-like sales by 4.9 per cent in the four weeks to 10 January after it boosted online trading by almost a third and held ten fewer days of sales.

The performance was in contrast to the previous year’s Christmas, when it was forced to issue a profits warning due to poor sales and a botched promotional strategy.

The company has since overhauled its pricing and online offer, but analysts questioned whether it had done enough.

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Retail analyst Nick Bubb pointed out that Debenhams had been selective with the period it chose to highlight in its latest statement.

He said: “Needless to say, performance wasn’t so good over the 19 weeks to 10 January, with like-for-like sales down by 0.8 per cent.

“And despite ‘less discounting’ at Christmas, a strong performance from lower-margin categories through the period combined with ‘a challenging season in clothing’ will result in gross margin being towards the lower end of guidance for the year as a whole.

“However, thanks to some cost-cutting, profit guidance looks unchanged.”

But Debenhams chief executive Michael Sharp said he was pleased with the company’s performance in the critical Christmas trading weeks.

He said: “Our performance steadily improved following the well-documented challenges in the clothing market in the autumn.

“We now have a competitive online proposition with next day delivery to home and next day click and collect, which customers took full advantage of and which performed well over Christmas.”

However, the firm said the outlook for the coming year would again be challenging.

Debenhams’ performance contrasted with that of online fashion retailer Asos, which pleased investors by sticking to its full-year forecasts.

Asos chief executive Nick Robertson said: “Trading over the last six weeks was in line with expectations at plus 15 per cent, with growth accelerating over the first quarter as anticipated. UK sales remained strong at plus 27 per cent.”

Bubb said there had been fears Asos would slip up after peer Boohoo fell short of expectations last week.

But he said: “Guidance for the outcome for the full year in terms of both sales and profit margin remains unchanged, so that will reassure the City.”

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