TIDMDEB
RNS Number : 6816M
Debenhams plc
10 January 2019
10 January 2019
This announcement contains inside information
DEBENHAMS PLC
CHRISTMAS TRADING UPDATE
Debenhams plc today announces its trading update for the 6 weeks
and the 18 weeks to 5 January 2019.
Financial Summary
-- Against a challenging market backdrop, the Group is currently
on track to deliver current year profits in line with market
expectations[1], supported by further identified cost savings.
-- Group gross transaction value for 6 weeks to 5 January
declined (3.8)% with group like-for-like sales down (3.4)%. In this
period, the UK declined by (3.6)%, with weak store footfall offset
by growth in digital.
-- For the 18 weeks, group gross transaction value declined
(5.6)%, with LFL down (5.7)%. The UK was down (6.2)% with
International down (3.5)%. Digital sales have grown by 4.6% across
the period.
-- The UK trading environment has continued to be volatile, as
expected, with clear evidence that our customers have been seeking
out promotions. As a result we reinstated some tactical promotional
activity in order to be competitive and manage inventory tightly,
which will result in some gross margin erosion in the first
half.
-- We continue to generate cash, with net debt as at 5 January
of GBP286m, within the context of our total committed debt
facilities of GBP520m.
-- In light of the requirement to refinance existing bank
facilities within the next 12 months, constructive discussions have
commenced with lenders, and the group has put on hold any further
asset disposals until the outcome of those discussions is known.
This process includes options to bring new sources of funding into
the business to ensure the appropriate capital structure. We will
update on progress with these plans shortly.
Strategic priority update
-- After a slow start to the season, group digital sales rose
6.0% in the 6 week period over peak against a strong comparative
performance, delivering two year growth of over 20%. This was
supported by improved mobile conversion and customer
experience.
-- New Beauty strategy drove more choice and digital innovation
supporting growth in market share in skincare[2] to mitigate
decline in premium make-up market.
-- Revitalised product has driven improved market share in
womenswear[3]; and differentiated gift offer delivered an improved
margin performance over peak, with food sales also delivering
overall growth of 2% in the 18 weeks.
-- Nine stores trading in new design format have outperformed
the core chain, with the strongest LFL uplift being seen at
Stevenage.
-- Previously announced cost savings of an annualised GBP50m,
rising to at least GBP80m taking into account additional
opportunities identified.
Sergio Bucher, Chief Executive of Debenhams, said:
"We have worked hard to deliver the best possible outcome in
very uncertain times for retailers. We responded to a significant
increase in promotional activity in the market, particularly in key
seasonal categories, in order to remain competitive for our
customers. We have taken decisive steps to maintain rigorous cost
and capital discipline and I am grateful to my colleagues for their
hard work as we maintain a rapid pace of change.
In order to ensure that Debenhams has a sustainable and
profitable future we need a strong customer proposition, a
strengthened balance sheet and a reshaped store portfolio. We have
a robust plan to deliver this and while there is much work still to
do, the performance of our Redesigned stores over peak, and
continued outperformance in digital, reinforce our view that we are
taking the right steps to protect the future of the business."
Sales performance
THIS YEAR LAST YEAR
18wks FY
Percentage change 6wks to 6wks to 18wks 18
to last year to 05/01/19 05/01/19 06/01/18 to 06/01/18
% % % % %
Group Gross Transaction
Value (3.8)% (5.6)% 3.6% (0.6)% (1.8)%
Reported LFL (3.4)% (5.7)% 2.9% (1.4)% (2.3)%
Constant currency
LFL (3.5)% (5.7)% 2.2% (1.9)% (2.7)%
-ENDS-
A conference call for analysts and investors will be held at
9.00am today. To join the call, please dial +44 (0) 330 336 9105
(UK/Europe) or +1 323 794 2551 (US), PIN 7671313. A recording of
the call will be available for seven days on +44 (0) 20 7660 0134
or +1 719 457 0820, PIN 7671313.
The Group will hold its AGM this afternoon at 2.00pm, at the
Delancey Theatre, ORT House, 126 Albert Street, London NW1 7NE, as
announced on Wednesday 2 January.
Enquiries:
Analysts and investors
Debenhams PLC Rachel Osborne, CFO
Katharine Wynne, Director of Investor Relations
020 3549 6304
Media
Brunswick Group Tim Danaher/Craig Breheny
020 7404 5959
Notes to editors
Debenhams is a leading international, department store
destination with a proud British heritage which trades out of
around 240 stores and is available online in more than 90
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, FrostFrench, Patrick Grant, Henry Holland,
Julien Macdonald, Savannah Miller, Jenny Packham, Richard Quinn,
Aliza Reger, Ashley Thomas, Preen and Matthew Williamson.
[1] Analyst expectations available at
https://ir.debenhams.com/financial-information/analyst-coverage
[2] NPD data for 12 weeks to 24 November 2018
[3] Kantar Worldpanel data for 24 weeks to 18 November 2018
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END
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