Debenhams announced its headline profit before tax was up 10.7% at £104 in its interim trading report. Rob Templeman, Chief Executive of Debenhams, said: “The increase in profitability in the first half is a considerable achievement given the difficult trading conditions across the retail sector and reflects our commitment to producing stylish, quality products at exceptional value as well as a ontinuing focus on the levers that drive cash margin.
“We are pleased with the performance of our own bought ranges and in particular Designers at Debenhams where design excellence and enhanced product quality at great value are continuing to prove popular with consumers. This has led to further market share gains.
“There is much to look forward to in the second half particularly in relation to the development of own bought product ranges with the expansion of some existing brands and the launch of a number of exciting new brands throughout the store at the end of the summer. The second half has started well with improvements in gross transaction value, like-for-like sales and gross margin. That said, we remain cautious about the outlook for consumer confidence for the remainder of the year and we will continue to run the business accordingly, with an ongoing focus on cash profit.”
Gross transaction value for the period grew by £3.6 million to £1,307.2 million. Like-for-like sales decreased by 3.6%, excluding VAT. Gross margin for the 26 week period was 10 basis points higher than last year, partly driven by stronger own bought sales mix versus concessions.
The main drivers of this resilient profit performance were the increase in gross transaction value, the continuing tight management of costs and stocks and management’s focus on the levers that drive cash margin. It is also a testament to the successful trading strategy executed over the important Christmas trading period.
The company states there is much to look forward to in the second half particularly in relation to the development of own bought product ranges with the expansion of some existing brands and the launch of a number of exciting new brands throughout the store at the end of the summer. The second half has started well with improvements in gross transaction value, like-for-like sales and gross margin. That said, we remain cautious about the outlook for consumer confidence for the remainder of the year and we will continue to run the business accordingly, with an ongoing focus on cash profit.
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