| 10.5°C Belfast

Debenhams upbeat as cotton costs start to fall

Department store Debenhams offered some cheer for shoppers as it signalled the recent surge in cotton prices may have peaked.

The chain is hopeful that prices for commodities such as cotton, which have rocketed in the past year, could fall back in a move that would ease some of the pressure on consumers and the margins of retailers such as Debenhams.

The chain added that its underlying profits increased 4.5% to £129.2m in the 26 weeks to February 26, despite flat same-store sales as it concentrated on higher-margin private label and designer brands.

It gave no indication about its current trading performance but underlined its improved prospects by reporting its first dividend since 2008.

Numerous retailers including HMV, Mothercare and Currys and PC World-parent Dixons Retail have warned on profits as they have struggled to pass on rising prices to cautious shoppers.

This week it emerged that the official rate of inflation dropped to 4% in March from 4.4% the previous month as retailers put on more discounts.

Debenhams, which has 167 stores in the UK and Ireland, said it was encouraged by strong sales from ranges from designers such as Jonathan Saunders, Preen, and Jasper Conran. It claimed to have grown its share of the womenswear, childrenswear, cosmetics and perfume markets.

Weekly Business Digest

Margaret Canning’s selection of the must-read business stories straight to your inbox every Tuesday morning

This field is required

Sales through its internet arm Debenhams Direct rose 82%. Best sellers included Egyptian cotton towels, Christian Lacroix perfume, Thorntons chocolates, and remote-control helicopters.