Debenhams Cautious As Full-Year Sales Stay Flat

U.K. clothing and homeware retailer Debenhams PLC (DEB.LN) Tuesday said it remains cautious about consumer confidence as it reported flat yearly sales.

The second-largest department store chain in the U.K. by sales behind Marks & Spencer Group PLC (MKS.LN) said sales from stores open at least a year for the 52 weeks to Aug. 28 were knocked by around 1.5% as the company continued to reduce floor space allocated to concessions, in favor of its own-brand and designer ranges.

Debenhams didn't detail the sales figures.

Still, the company has guided for full-year pretax profit of around GBP150 million, up 20% year-on-year.

"Our profit performance has been pleasing but we believe it is correct to remain cautious about the level of consumer confidence going forward," Chief Executive Rob Templeman said in a statement.

Gross transaction value increased 9.6% including Magasin du Nord. Excluding the Danish department store, it rose 1.4%.

U.K. retail sales picked up in August as back-to-school wear boosted sales, but discounting played a part in the improvement. In addition, uncertainty about the impact of government austerity measures, including tax hikes and public spending cuts, put consumers off making large purchases.

Last week, the company said it would cut prices by up to 25% to boost sales and reduce stock, in the latest sign that the industry is concerned about the outlook on consumer trends.

Debenhams shares closed Monday at 65 pence, valuing the company at GBP836 million.

By Simon Zekaria, Dow Jones Newswires; +44 207 842-9410; simon.zekaria@dowjones.com

Debenhams (LSE:DEB)
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