Interim Management Statement


 

TIDMDEB 
 
RNS Number : 3663F 
Debenhams plc 
12 January 2010 
 

 
 
12 January 2010 
 
 
 
 
DEBENHAMS plc - INTERIM MANAGEMENT STATEMENT 
 
 
 
 
Debenhams plc, the leading department stores group, today releases its interim 
management statement for the year-to-date. This covers the 18 weeks ended 2 
January 2010. 
 
 
Gross transaction value (excluding the recent acquisition of Magasin du Nord) 
for the 18 weeks  was 1.6% higher than the same period last year. 
 
 
Like-for-like sales increased by 0.1% over last year, which was in line with our 
internal forecast.  This includes the previously advised impact of lower sales 
densities resulting from the strategy of moving space away from concessions and 
into own bought merchandise which has had the effect of reducing like-for-like 
sales by c.1.5% since the beginning of the financial year. 
 
 
Progress continues to be made in terms of market share, particularly in relation 
to menswear,  childrenswear (source: TNS Worldpanel Fashion 24 weeks market 
share data to 8 November  2009 vs. 2008) and home (source: GFK). 
 
 
Gross margin year-to-date has been particularly pleasing and has improved 
significantly over the corresponding period last year. The gross margin 
improvement has been achieved through our strategy of focusing on the drivers of 
cash gross profit, principally by repositioning our product offer towards a 
higher mix of own bought ranges as well as lower markdown. 
 
 
Stocks continue to be tightly controlled. Terminal stocks are forecast to be 
within 2.75% to 3.00% at the half year. 
 
 
We are continuing to invest in the future growth of the business. Following the 
success of the recent refit of the Cardiff store, we will be accelerating the 
store refit programme as well as investing in more brand make-overs across the 
whole store portfolio. This investment, in addition to the acquisition of 
Magasin du Nord, will result in capital expenditure guidance for the year 
increasing to c.GBP115 million. 
 
 
Cash generation during the year to date has been in line with forecast. As a 
consequence, an additional voluntary repayment of GBP75 million of gross debt 
has taken place. A further GBP17 million in market buybacks of debt have also 
been achieved since the October 2009 full year results announcement, bringing 
the total market buybacks to GBP78.4 million, purchased at an aggregate discount 
of c.5%.  Adjusting for the higher capital expenditure guidance and additional 
debt repayment and buybacks, net debt at year-end is expected to be within the 
range of market forecasts. 
 
On 12 November 2009, Debenhams announced the purchase of six stores in Denmark 
through the acquisition of A/S Th. Wessell & Vett, Magasin du Nord ("Magasin du 
Nord"), the leading Danish department store chain. We were pleased with the 
trading performance of the Magasin du Nord stores over the Christmas period 
which met our expectations.  The completion of the acquisition is expected to be 
finalised over the next few weeks and we will update the market on the trading 
performance and our business plans for Magasin du Nord at our interim results 
presentation. 
 
 
During the 18 week period, three new Desire by Debenhams stores were opened in 
Kidderminster, Monks Cross and Witney.  Three new department stores are 
scheduled to open in the remainder of the year in Newcastle-upon-Tyne, 
Carmarthen and Bury.  In addition, an international franchise store has opened 
in Vietnam. 
 
Rob Templeman, Chief Executive of Debenhams, said: 
 
 
"We are pleased with our overall performance in the first 18 weeks of the year 
which was in line with our own forecast. Our continued focus on cash 
margin means that for the second year in succession we have delivered an 
increase in profit before tax over the Christmas trading period. 
 
 
"Looking forward, with the rise in VAT and a general election pending, the 
consumer environment remains uncertain and difficult to predict. Against this 
backdrop, we will continue to execute our strategy of improving gross margins 
through the expansion of our successful and exclusive Designers at Debenhams 
ranges. The launch of our new ranges Principles by Ben de Lisi and H! by Henry 
Holland will give customers an even greater choice within our Designer ranges. 
 We believe that the strength of our own bought offer will enable us to expand 
gross margins throughout the remainder of this year." 
 
 
Debenhams' interim results for the 26 weeks ending 27 February 2010 will be 
announced on 13 April 2010. 
 
 
A conference call for analysts and investors will be held today at 8:30am. To 
join this call, please dial +44 (0) 20 8609 0581. A recording will be available 
for seven days on +44 (0) 20 8609 0289, PIN 279390#. 
 
 
 
 
Enquiries 
Analysts/Shareholders 
Debenhams plc 
Rob Templeman, Chief Executive 
Chris Woodhouse, Finance Director 
Lisa Williams, Investor Relations    020 7408 3304/07908 483841 
 
 
Media 
Financial Dynamics 
Jonathon Brill       020 7269 7170 
Billy Clegg                            020 7269 7157 
Caroline Stewart    020 7269 7227 
 
Statements made in this announcement that look forward in time or that express 
management's beliefs, expectations or estimates regarding future occurrences and 
prospects are "forward-looking statements" within the meaning of the United 
States federal securities laws. These forward-looking statements reflect 
Debenhams' current expectations concerning future events and actual results may 
differ materially from current expectations or historical results. Any such 
forward-looking statements are subject to various risks and uncertainties, 
including: Debenhams' ability to predict customer preferences and demands 
accurately; the effectiveness of Debenhams' brand awareness and marketing 
programmes; the occurrence of weak sales during peak selling seasons or extreme 
or unseasonal weather conditions; difficult market conditions and fragile 
consumer confidence; competitive factors in the highly competitive retail 
industry; Debenhams' ability to successfully implement its new store rollout and 
department store refurbishment strategy; Debenhams' ability to maintain its 
relationships with certain designers and its significant concession partners; 
and currency fluctuations and currency risk. 
*    *    * 
Additional risk factors that you may want to consider are: Debenhams' ability to 
retain key management and personnel; disruptions or other adverse events 
affecting Debenhams' relationship with its major suppliers or its store card 
provider; factors outside Debenhams' control, such as changes in the financial 
or equity markets, adverse economic conditions or a downturn in the retail 
industry, or damage or interruptions due to operational disruption, natural 
disaster, war or terrorist activity; and work stoppages; slowdowns or strikes. 
 
 
 
 
Notes to Editors 
 
 
Debenhams is a leading department stores group with a strong presence in key 
product categories including Womenswear, Menswear, Childrenswear, Home and 
Health and Beauty. Debenhams is the second largest department store chain in the 
UK. 
 
 
Debenhams has a total of 144 department stores in the UK and the Republic of 
Ireland and 13 Desire by Debenhams stores, which is a small store concept 
featuring a mix of womenswear, accessories, lingerie, cosmetics and 
childrenswear. Debenhams has 50 international franchise stores in 18 countries 
and an online store, www.debenhams.com, through which much of the Debenhams 
range is available. 
 
 
Designers at Debenhams include Ted Baker, Jasper Conran, Erickson Beamon, Pip 
Hackett, Henry Holland, Betty Jackson, Ben de Lisi, Julien Macdonald, Melissa 
Odabash, Jane Packer, Pearce Fionda, Janet Reger, John Rocha and Matthew 
Williamson. 
 
 
 
 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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