TIDMDEB
RNS Number : 8751B
Debenhams plc
22 June 2016
22 June 2016
DEBENHAMS PLC
TRADING UPDATE
Debenhams plc, the leading international, multi-channel brand,
today announces its trading update for the 15 weeks and the 41
weeks to 11 June 2016.
Financial Highlights
-- Group gross transaction value: 15 weeks +0.5%; 41 weeks +1.3%
-- Group like-for-like sales: 15 weeks (0.2)%; 41 weeks +0.7%
-- Constant currency like-for-like sales: 15 weeks (1.6%); 41 weeks +1.2%
-- Online sales growth: 15 weeks +7.0%; 41 weeks +9.1%
-- Gross margin guidance for FY2016 revised to flat vs previous guidance range of +0bp to +50bp
-- Cost growth for FY2016 expected to be at the lower end of
previous guidance range of +2% to +4%, including the impact of
introducing the National Living Wage in April
-- Despite volatility in the trading environment, we currently
anticipate that FY2016 PBT will be within the range of market
forecasts
-- Strong cash generation with net debt for FY2016 expected to
be in line with guidance range of GBP270-GBP290m
Operational Highlights
-- Our focus on strategic priorities continues, and in response
to a more volatile trading environment, we are keeping costs tight,
managing margin and driving cash generation
-- Tight control of stock in all divisions and strengthened
promotional stance in a weak clothing market is expected to deliver
terminal stocks in line with historical low levels
-- Space optimisation progressing with 75% of 1m sq ft to be
filled by Christmas, in line with plan
-- Roll-out of new food concessions progressing with additional 30 offers in place by October
-- Within our international division, constant currency sales
are up, although the overall performance has remained mixed. As
guided, the foreign exchange impact is positive in the latest
period. Our Irish business has successfully applied for
Examinership, which should complete by the year end
Michael Sharp, Chief Executive of Debenhams, said:
"Our strategy remains unchanged, with further progress in
driving our non-clothing mix, continuing to improve service for
multi-channel customers, and offering a wider choice of products
and services in under-optimised space. In response to more
uncertain trading conditions in this period, particularly in
clothing, we have focused on managing stock and margins and
generating cash.
"I am confident that I am leaving the business in the hands of a
very strong management team, who will continue to execute our
strategy and support our new CEO, Sergio Bucher, through the next
phase of Debenhams' development. Our wide product choice, clear
destination departments and improving service proposition gives us
a strong platform from which to deliver long term sustainable
growth."
Performance in the second half to date
In the 15 week period, Group gross transaction value rose by
0.5%, taking the cumulative year-on-year performance to growth of
1.3%.
The UK trading environment has been weaker since the new year,
particularly in clothing, and our strategy to increase the mix of
non-clothing sales has supported our performance against this
background, with Health and Beauty sales in particular continuing
to show good growth. Having tightened our initial buy, we are also
taking action to manage seasonal stocks, particularly in
womenswear, including selected promotional activity. As a result,
we expect to end the year in a clean seasonal stock position, in
line with our plan.
Online sales grew by 7.0% against strong comparatives in the 15
week period, with cumulative growth for the year to date of 9.1%.
We continue to see positive trends in mobile, which now represents
over 50% of UK online orders and strong growth in Click &
Collect, up 19% year on year.
We have plans in place to fill 75% of the identified 1m sq ft in
our space optimisation programme for the Christmas peak. We are
rolling out a further 18 Jack & Jones concessions by October
and launching Claire's Accessories in 15 stores. Having trialled
two furniture display concepts in Manchester and Gateshead, we are
opening a further six for the Autumn/Winter season.
Our plan to increase casual dining options across the Debenhams
store estate is making good progress, with a further 30 food offers
planned to open by the Autumn, so that approximately 40% of our
stores will have a new food offer by Christmas 2016. Westfield
White City will increase its food offers to three with the opening
of Italian restaurant concept, Franco Manca, and we are planning to
launch another new casual dining partnership in our modernised
Lakeside store.
Within our International division, performance has remained
mixed. However, constant currency sales are ahead year on year and
the foreign exchange impact became positive, as guided, in the
latest period. Magasin du Nord's growth has slowed somewhat,
reflecting similar trends in Denmark to the UK. International
online continues to grow strongly from a small base, supported by
our new web platform. As previously announced, our Irish
subsidiary, Debenhams Retail (Ireland) Ltd has successfully applied
for Examinership and the process is expected to be completed by the
financial year end.
Group gross margin for FY2016 is now expected to be flat,
compared with previous guidance of +0bp to +50bp, reflecting the
tactical response to more challenging trading conditions in the
second half. With continuing tight control of operating costs and
good cash generation against a more uncertain trading background,
the group currently anticipates that FY2016 PBT will be within the
range of market forecasts.
-ENDS-
A conference call for analysts and investors will be held at
8.30am today. To join the call, please dial +44 (0) 20 3427 1915
(UK/Europe) or +1 646 254 3361 (US), PIN 745106. A recording of the
call will be available for seven days on +44 (0) 20 3427 0598 or +1
866 932 5017, PIN 745106.
Enquiries:
Analysts and investors
Matt Smith, Debenhams plc
Katharine Wynne, Debenhams plc 020 3549 6304
Media
Simon Sporborg, Brunswick Group
Helen Smith, Brunswick Group 020 7404 5959
Notes to editors
Debenhams is a leading international, multi-channel brand with a
proud British heritage which trades out of over 250 stores across
27 countries. Debenhams gives its customers around the world a
unique, differentiated and exclusive mix of own brands,
international brands and concessions.
Debenhams has been investing in design for over 20 years through
its exclusive Designers at Debenhams portfolio of brands. Current
designers include Abigail Ahern, Jeff Banks, Jasper Conran, Sadie
Frost and Jemima French, Patrick Grant, Henry Holland, Betty
Jackson, Stephen Jones , Ben de Lisi, Todd Lynn, Julien Macdonald,
Jenny Packham, Aliza Reger, John Rocha, Ashley Thomas, Justin
Thornton, Eric Van Peterson and Matthew Williamson.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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