Debenhams' annual profits drop, but shares up as in line with expectations, and Selfridges' profits fall too

27/10/2016

• Pretax profits fall 10.4% at Debenhams to £101.7m after exceptionals
• Privately-owned Selfridges sees profits slip 1.9% impacted by investment
• But amidst gloom, CBI survey shows retail sales growing this month

Debenhams today delivered results in line with market expectations, although that was still a drop in annual profits, and said it was well-placed for the year ahead.
Britain’s second biggest department store saw its pretax profits fall 10.4 per cent to £101.7million for the 52 weeks to August 27, after exceptional charges of £12.4million, as like-for-like sales edged up 0.7 per cent, while total sales rose 1.3 per cent to £2.9 billion.
In June, Debenhams - which is second to department store rival John Lewis in terms of revenue - had warned that demand for clothes had been weak amid ‘uncertain trading conditions’ around the Brexit vote and topsy-turvy summer weather.
Debenhams chairman Sir Ian Cheshire said today: ‘We have delivered profits in line with market expectations, reflecting a strong performance over peak followed by a tougher second half trading environment.'

He added: ‘Our strategy to rebalance the business towards non-clothing has supported our performance, with strong progress in beauty, gifting and food.’

In reaction to today’s ‘solid’ results, Debenhams shares on the FTSE 250 index gained 3.4 per cent, or 1.8p at 55.5p. The stock has lost a third of its value over the last six months.

Scott Ransley, analyst at Stifel, said: ‘Debenhams' exposure to non-clothing categories such as beauty, gifts and food has rendered the top line more stable than at some of the mainstream clothing competitors.
‘Lower competitive pressure on occasion wear and a refreshed line-up of Designer at Debenhams ranges including Jasper Conran, Savannah Miller and Patrick

Grant also support aspirational demand.’
The 240-strong store chain said new chief executive Sergio Bucher, a former Amazon fashion chief who only took up his post 10 days ago, will update the market on his longer term plans for the next phase of Debenhams' development in the spring.

George Salmon, Equity Analyst at Hargreaves Lansdown: ‘Debenhams has hit profit expectations, but life in the UK’s clothing market has been difficult. With further pressure coming from the impact of the weaker pound, it is probably only going to get tougher for retailers in the coming months.
‘The group has currency hedges in place for the coming year, so won’t feel the pinch from weaker sterling just yet, but it is just a matter of time.

‘As and when the extra costs associated with the lower pound filter through, the group says that it will seek to remain competitive on price, which could well mean a hit to margins. The group does at least have plenty of time to prepare and so far the group’s cost control has been good.’
Britain's clothing market has been shrinking, with retailers including Next and Marks & Spencer also struggling to increase sales. Data from market research body Kantar Worldpanel showed the UK fashion market suffered its steepest decline since 2009 for the 12 months ended in September.

But a survey released today offered some respite from the gloom, showing retail sales growing this month at their fastest pace in over a year as shoppers sought out for autumn clothes after an unseasonably warm end to the summer.

The Confederation of British Industry monthly Distributive Trades Survey showed above-average sales for the time of year, with 40 per cent of retailers reporting increased sales volumes in October on a year ago and 19 per cent saying they were down.

The latest figures gave a balance of +21 per cent, well above expectations for +7 per cent and an improvement on the previous month's balance of -8 per cent.

The expected sales balance for November also rose sharply to +21 per cent, up from +7 per cent in September, a level last seen in December, and orders placed with suppliers were the strongest since March, although they are expected to dip.

CBI chief economist Rain Newton-Smith said: ‘With our Indian Summer now a distant memory, shoppers have been pounding the high street, with sales of clothing and other retailers outpacing expectations.’

But, Ms Newton-Smith added: ‘With employment still rising and the unemployment rate at an 11-year low, household spending still has some momentum in the short-term, but we do expect the fall in the value of the pound to push up prices through the course of next year, hitting people's purchasing power.’

Meanwhile, privately-owned department stores group Selfridges today reported a drop in its full year profit impacted by a company-wide investment programme.
The retailer said its operating profit fell 1.9 per cent to £152million in the 12 months to January 31, compared to a year earlier, despite gross sales increasing by 5 per cent to £1.4billion - a record for the company.

The firm stressed that it was two years into an ‘ambitious’ £300million revamp of its flagship store on London’s Oxford Street and its online offering, which marked an ‘unprecedented level of investment’ for the retailer.

Selfridges said that spending grew among both overseas and domestic customers, though UK shoppers still accounted for about 70 per cent of sales.

Fonte:http://www.dailymail.co.uk/money/markets/article-3878672/Debenhams-annual-profits-drop-line-expectations-Selfridges-profits-fall-too.html

LEGGI GLI ALTRI BLOG

• < Prec
• Succ >