Department store becomes latest retailer to signal slowdown in consumer behaviour in the UK
Companies: Debenhams
Sales at high street department store chain Debenhams fell during the last quarter, as “more volatile” trading in the UK hit the firms clothing business. The retailer became the latest in the UK to warn investors about market volatility and the potential impact of a slowdown in consumer spending.
For the 15 weeks to the end of June, gross transactions were up just 1%, with LFL sales up 0.9% (+2.4% constant currency), driven mostly by growing online sales which increased 8%.
The firm said it was anticipating that pre-tax profit for the year would be within the range of expectations, but stated that if the current volatility continued, it would be towards the lower end of the current range.
Unfortunately, it didn't provide investors with the details as to what that range was in the update...
"The range of market expectations is sourced from the reports of 18 analysts dated between 13 January 2017 and 17 May 2017."
In the second half of the year, Debenhams said trading had been volatile. Sales in its strategic areas of Beauty, Accessories and Food grew, offsetting a weaker clothing market.
Meanwhile, digital growth was driven by mobile demand - as you would expect - with enhancements supporting mobile growth (up 47% YOY) and improved conversion rates up 12%.
Online sales growth has slowed in recent weeks, following the trend seen by other UK online retailers, but remained strong in the year to date.
CEO Sergio Bucher said the industry data had confirmed that May was a tough month for retailers with volatility in trading week to week.
"As a result, we are focused on delivering cost control and self-help through our "Fix the Basics" plan. We continue to build good foundations for longer-term growth at Debenhams by becoming a Destination, Digital and Different."
He added that the firm was making progress on its new strategy "Debenhams Redesigned", a strategy that the company hopes will make it the "destination for social shopping".
"We launched our new strategy, Debenhams Redesigned, at our interim results presentation in April. This will position us to become the leader in Social Shopping - shopping as a fun leisure activity centred around mobile interaction with our customers. We aim to drive Growth by becoming a Destination, Digital and Different, and Efficiency by simplifying and focusing our operations."
The firm said it had hired two new directors to its leadership team in the period, with Sally Hyndman joining from Dixons Carphone as HR Director, and Angela Morrison joining from Direct Line as Tech and Supply Chain Director.
