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Debenhams' sales slide 1.6% amid difficult trading conditions

By Holly Williams

Published 23/06/2016

A model in one of the store’s lines
A model in one of the store’s lines

Department store chain Debenhams, which has five stores in Northern Ireland, revealed falling sales as it said demand for clothes had been weak amid "uncertain trading conditions".

The group posted a 1.6% fall in like-for-like sales for the 15 weeks to June 11 with currency movements stripped out, and warned that its profit margins would be lower than expected as it slashed prices to shift stock.

The firm has stores in Belfast's CastleCourt Shopping Centre, Ballymena's Fairhill, Rushmere in Craigavon, Newry's Quays and Londonderry's Foyleside centre.

News of the fall came after its Irish arm, which has 11 outlets in the Republic, was placed in examinership, blaming high rents and staff costs for losses.

Debenhams said it had used "tactical" discounting after seeing weak sales of womenswear, and added it remained on track to cut down on promotions.

Outgoing chief executive Michael Sharp said: "In response to more uncertain trading conditions in this period, we have focused on managing stock and margins and generating cash."

The sales fall marks a reversal of the 2.4% rise in the previous six months and follows a difficult spring for high street clothing shops, which resorted to discounting after a cold early spring weather hit womenswear sales.

Shares in Debenhams dropped 5% after the update, with analysts trimming full-year expectations despite the chain saying it was on track to meet forecasts.

Mr Sharp, who is stepping down tomorrow after nearly five years at the helm, said the group was "holding its own" in a difficult wider clothing market, which was more than 4% lower in its third quarter.

He claimed that on top of the weather, trading has been impacted by the EU referendum and the timing of Easter, Mother's Day and Father's Day.

The collapse of BHS is also thought to have been unhelpful to the group, although Mr Sharp said there was little cross-over between BHS and Debenhams.

He added: "It's very unfortunate what's happened at BHS and nobody in retail likes to see another retailer fail."

Mr Sharp joined rival Next in warning over a change in spending habits, saying shoppers were buying fewer clothes and splashing out more on holidays.

The group is looking to tap into the growing eating-out market by rolling out more food and drink concessions, such as Costa Coffee and Patisserie Valerie.

It wants to add another 30 food offers by the autumn, with plans for around 40% of its stores to have a new food concession by Christmas.

Debenhams said its international arm - including Magasin du Nord in Denmark - saw a rise in constant currency sales in the third quarter, although it added that trading was mixed.

Incoming boss Sergio Bucher will have a task on his hands to reinvigorate clothing sales.

The Amazon fashion chief joins in October after three years acting as vice president of the internet titan's burgeoning clothing arm in Europe.

Debenhams is looking to reduce its reliance on clothing, boosting its non-food offering, while also driving up mobile sales.

It said online sales grew 7% in its third quarter, with mobile accounting for half of all internet orders in the UK and click and collect up 19% year on year.

Belfast Telegraph

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