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Debenhams Trading Update June 2015

Trading update for the 15 weeks and 41 weeks ended 13 June 2015
Q3 Sales +0.4%
YTD Sales +1.7%
Q3 LFL 0.0%
YTD LFL +0.9%

Our comments
Debenhams has continued to keep in positive sales growth despite the dilution of
Q3 like for like sales of around 1% due to the shift in its promotional calendar, which brought forward its New Season Spectacular into H1.

It has also suffered, like many retailers with an international arm, from a negative currency impact, in its case of 2.1%. Despite these two factors sales were marginally ahead for Q3 at 0.4%, and for the full year to date up 1.7% and it is on track to meet full year expectations.

Encouragingly, considering the investment and focus Debenhams has given to its online business, sales in Q3 were up by 16.7% against 12.7% in H1. This performance was helped by a more competitive service offer, including lower delivery charges and improvements in its presentation online.

The retailer is opening five new stores over the Autumn, in Bradford, Wandsworth, Rugby, Beverley and Newport which will boost growth further. Often Debenhams is the only department store in a town and can offer a much wider range of brands than is available in town centres which gives it destination appeal to local catchments.

Furthermore the addition of new brands and concessions, including BHS Lighting (trialling in two stores), Patisserie Valerie (six stores) and Chi Kitchen, is helping to fill the one million sq ft of available space it has identified; it is on track to fill more than 50% of this space by April 2016.

The benefit of adding branded food service concessions are that they increase dwell time and foot fall. However this is also a vital defensive measure considering consumer trends and the competition. The increasing availability of food service sites in shopping malls, high streets and other department stores make this an essential step to ensure Debenhams does not lose its shoppers’ available food service spend, or more importantly, their presence.

Source: Conlumino Viewpoint 25 June 2015

June 2015

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