Debenhams Plans To Reinstate Dividends In 2011

Department store chain Debenhams PLC (DEB.LN) Thursday posted a 20.6% rise in fiscal year pretax profit, adding that it expects to reinstate dividends at the half-year stage next year.

Chief Executive Rob Templeman said, "Although we remain concerned about the general retail environment, we are encouraged by the start to the new financial year which has seen positive like-for-like sales and gross margin in the early weeks."

He said the company will continue to focus on managing gross margins, driving market share and growing through expansion and investment.

Pretax profit before exceptional items rose to GBP151 million for the 12 months to Aug. 28 from GBP125.2 million last year--slightly beating the company's guidance in September for GBP150 million. Sales rose 9.6% to GBP2.56 billion.

The second-largest department store chain in the U.K. by sales behind Marks & Spencer Group PLC (MKS.LN) has been increasing its higher-margin own-brands, which has helped grow profits even as sales growth has tempered.

Fiscal year net profit edged higher to GBP97 million from GBP95.1 million a year ago.

The company said it intends to recommence dividends in April 2011, targeting an initial level of dividend cover of around three times adjusted earnings per share.

Debenhams has 160 stores in the U.K. and Ireland, six in Denmark and 60 franchised outlets abroad.

Over the past three months, Debenhams' shares have gained 22%, closing Wednesday at 71 pence.

-By Kathy Gordon, Dow Jones Newswires; 44-207-842-9293; kathy.gordon@dowjones.com

Debenhams (LSE:DEB)
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