UPDATE: Debenhams Same-Store Sales Down 0.4%; Remains Cautious

U.K. department store chain Debenhams PLC (DEB.LN) said Thursday that same-store sales declined 0.4% for the 42 weeks to June 19 from a year earlier, and that it remained cautious about consumer confidence.

The group, the U.K.'s second-largest department store behind Marks & Spencer Group PLC (MKS.LN), said same-store sales were impacted by its strategy to improve margins through space bought in the fourth quarter of 2009, as well as stronger activities in the third quarter of 2009.

It said total sales rose 8.9% for the 42 weeks to June 19 from a year earlier.

"We are pleased with the performance of the business so far this year and we continue to make progress in delivering our strategy of improving margins and profits through increasing the own bought element of our sales mix," Chief Executive Rob Templeman said in a statement.

"Looking forward across the balance of the year, we remain cautious about the strength of the overall retail market and the level of consumer confidence," he said.

In April, Debenhams reported stronger-than-expected fiscal first-half profit on modestly higher sales, but analysts said its sales figures meant the chain was lagging rivals in reviving revenue.

The group has 165 stores in the U.K., Ireland and Denmark, and 58 franchised outlets overseas.

In Thursday's interim statement, Debenhams said gross margin performance "has been strong" as it continues to focus on stock control and in managing markdowns.

It raised its previous guidance on gross margin for the year of an increase of 80 basis points excluding Magasin du Nord, which it bought in the first half of this financial year. Including the Danish department store chain, it guided for a flat gross margin.

Debenhams also said it expects to complete the refinancing of its debt facilities within the next few weeks, ahead of an April 2011 deadline.

-By Patricia Kowsmann, Dow Jones Newswires. Tel +44(0)207-842-9295, patricia.kowsmann@dowjones.com

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