Gifts Today magazine

Debenhams release trading update

Debenhams plc, the leading international, multi-channel brand, has announced its trading update for the 19 weeks to 9th January 2016

Financial Highlights 
• Group gross transaction value +2.5%
 • Group like-for-like sales +3.5% in constant currency; +1.9% as reported
• Online sales +12.1%; click & collect penetration has risen to 31% 
• Gross margin within FY16 guidance of +0 to +50bps
• Strong performance in the 7 week Christmas period to 9th January:
- LFL sales +3.7% in constant currency, two year growth of +7.1%; +1.8% as reported
- Online sales +15.4%, +26% over two years

Operational Highlights 
• Further progress on strategic priorities set out at the Prelims in October 2015 delivered a strong trading performance, with the Christmas week achieving record sales 
• Less discounting and a lower level of promotional activity led to full price sales growth of 5%, supported by planned reduction in stock levels across clothing, particularly in weather-sensitive categories 
• Black Friday, which falls within our existing promotional calendar, traded successfully and profitably with good year on year growth both in stores and online 
• Continuing service improvements delivered a further uplift in online performance over peak, with click & collect penetration peaking at 46% in the pre-Christmas period and strong growth in premium delivery services 
• As planned, five new stores opened between September and November 2015: in Bradford, Wandsworth, Rugby, Beverley and Newport
• Internationally, Debenhams performed in line with expectations, with Magasin du Nord in Denmark delivering a record Christmas and further strong momentum in constant currency

Michael Sharp, Chief Executive of Debenhams, said: 
“We have traded well in the first 19 weeks of the financial year with a strong performance over peak resulting in a record Christmas. This performance is evidence that our strategy is working with our customers finding our mix of products and brands both compelling and great value for money. The further improvements to our service proposition and our online presentation have delivered strong multi-channel sales growth, building on the progress we saw last year.

“I would like to thank all our colleagues for their continued hard work and support which has ensured that we traded our peak period successfully and with our systems and fulfilment working well. We remain on track to deliver full year profits in line with market expectations.”

Performance in the first half to date
In the 19 week period, Group gross transaction value rose by 2.5%, with like-for-like growth of 3.5% in constant currency, 1.9% as reported.
Further progress on our strategic priorities has supported our performance, delivering a good Black Friday and Christmas trading outcome and full price sales growth across the period of 5%. A planned reduction in outerwear clothing stocks has enabled us to trade a difficult autumn clothing season successfully and we entered the sale period post-Christmas with less stock than in the prior year, in line with our expectation. Strong growth in Beauty has reinforced our market leadership in the premium segment and despite tough comparatives over peak, sales across gift categories have shown good further growth. 

Non-clothing categories now account for 55% of total revenues, in line with our strategy.
Online sales have delivered continuing positive momentum in the 19 week period, growing 12.1% and with stronger growth over peak. This reflects increasing customer confidence in our service proposition as well as later cut-off times, the extension of endless aisle to improve availability, and more competitive premium delivery charges. 

We have made further improvements in our online presentation, with mobile orders our fastest-growing channel. As expected, click & collect penetration has continued to increase, growing at 45% year on year and accounting for 31% of online orders in H1 to date.
International sales grew in line with expectations, with Magasin du Nord continuing to deliver good growth and record Christmas trading helped by a recovering Danish economy. 

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