TIDMDEB
RNS Number : 2065J
Debenhams plc
27 June 2017
27 June 2017
DEBENHAMS PLC
TRADING UPDATE
Debenhams plc, the international department store group, today
announces its trading update for the 15 weeks and the 41 weeks
(financial year to date) to 17 June 2017.
Financial Highlights
-- Group gross transaction value: 15 weeks (1.0%); 41 weeks +1.7%
-- Group like-for-like sales: 15 weeks (0.9%); 41 weeks +1.8%
-- Constant currency like-for-like sales: 15 weeks (2.4%); 41 weeks (0.7%)
-- Digital sales growth: 15 weeks +7.9%; 41 weeks +12.6%
-- Gross margin guidance unchanged, cost guidance tightened to +3%, +1% in constant currency
-- We currently anticipate that 2017 profit before tax will be
within the range of market expectations. However, should current
market volatility continue, the outcome could be towards the lower
end of the current range.
Operational Highlights
-- The UK trading environment has been more volatile in the
second half of our trading year. However, our targeted destination
categories of Beauty, Accessories and Food & Drink have helped
to mitigate the impact of a weaker clothing market. With 13 new
food offers in the period, food sales have risen 5%.
-- We have delivered further improvement in full price sales,
with growth of 1.7% in the period. Action to manage seasonal stock
tightly in a continuing weak market for clothing is expected to
deliver terminal stocks in line with historical low levels, and
within our gross margin guidance.
-- Digital growth continues to be driven by mobile demand, with
further enhancements supporting rapid mobile growth, up 47% year on
year and improved conversion rates up 12%.
-- Across the international division our constant currency
performance has improved, and the foreign exchange impact has
remained positive in this period. Underlying markets remain mixed:
positive growth in Denmark has been offset by weaker trading in the
Middle East and the Republic of Ireland. A core Debenhams offer
launched on Amazon.de this month, as planned.
-- Having announced our new strategy, Debenhams Redesigned, in
April 2017, we are making good progress putting in place our plans
to drive growth through Social Shopping and our shorter term "Fix
the Basics" plan. This has included establishing a training
programme to support up to 2,000 colleagues switching to
customer-facing roles; implementing direct-to-floor deliveries,
which will cut replenishment times from eight days to two; and
completing the transition to a single warehouse management
system.
Sergio Bucher, CEO of Debenhams, said:
"We are making progress in implementing our exciting and
ambitious new strategy, Debenhams Redesigned, which will make us
the destination for Social Shopping. We have already started to
deliver changes that will improve service for our customers and
simplify and focus our operations.
"As industry data has confirmed, May was a tough month for
retailers and we continue to see volatility in trading week to
week. As a result we are focused on delivering cost control and
self-help through our "Fix the Basics" plan. We continue to build
good foundations for longer term growth at Debenhams by becoming a
Destination, Digital and Different."
Strategic and Operational update
We launched our new strategy, Debenhams Redesigned, at our
interim results presentation in April. This will position us to
become the leader in Social Shopping - shopping as a fun leisure
activity centred around mobile interaction with our customers. We
aim to drive Growth by becoming a Destination, Digital and
Different, and Efficiency by simplifying and focusing our
operations.
Destination: We have seen good growth in our strategic
destination areas of Beauty, Accessories and Food. This has helped
to mitigate the impact of a weaker clothing market.
Digital: Sales growth has slowed in recent weeks in line with
the UK online market, but year-to-date growth remains strong,
supported by enhancements including new beauty brand presentations
and a new payment page.
Different: We launched a new contemporary Designers@Debenhams
range this season, Studio by Preen, which has been very positively
received. We have seen a strong positive response to our brands on
third party platforms.
Simplify & Focus: We have welcomed two new directors to our
senior leadership team. Sally Hyndman, who has joined from Dixons
Carphone as HR Director, will lead the culture transformation in
our business. Angela Morrison, who has joined from Direct Line as
Technology and Supply Chain Director, will lead the changes that
will make our supply chain customer-led rather than process-driven.
We continue to make good progress in our "Fix the Basics" plan:
-- launched training programme to support up to 2,000 colleagues
switching to customer facing roles;
-- completed transition to single warehouse management system;
-- begun consultation on closure of Northampton distribution
centre and 10 regional warehousing facilities;
-- introducing direct-to-floor distribution supporting targeted
improvement in replenishment time from eight days to two days;
and
-- reduced stock options by c10% to declutter stores.
Outlook and guidance
The UK trading environment has been less predictable since
Easter, with industry data confirming May was tough for the retail
industry. There is no change to gross margin guidance for FY2017,
which remains at c(25bps) but as we focus on driving self-help
opportunities, we are tightening guidance on cost growth to +3%
(from +3% to +4%), which is approximately +1% in constant currency.
In light of the above, the group currently anticipates that FY2017
profit before tax will be within the range of market expectations,
but should current market volatility continue, profit before tax
could be towards the lower end of the current range.
-ENDS-
A conference call for analysts and investors will be held at
8.30am today. To join the call, please dial +44 (0) 330 336 9411
(UK/Europe) or +1 719 325 2202 (US), PIN 4619768.
A recording of the call will be available for seven days on +44
(0) 20 7984 7568 or +1 719 457 0820, PIN 4619768.
Enquiries:
Analysts and investors
Matt Smith, Debenhams plc
Katharine Wynne, Debenhams plc 020 3549 6304
Media
Tim Danaher, Brunswick Group
Helen Smith, Brunswick Group 020 7404 5959
Notes to editors
Debenhams is a leading international, department store
destination with a proud British heritage which trades out of over
250 stores across 27 countries and is available online in more than
60 countries. Debenhams gives its customers around the world a
unique, differentiated and exclusive mix of own brands,
international brands and concessions.
Debenhams has been investing in design for over 20 years through
its exclusive Designers at Debenhams portfolio of brands. Current
designers include Abigail Ahern, Jeff Banks, Jasper Conran, Sadie
Frost and Jemima French, Patrick Grant, Henry Holland, Ben de Lisi,
Todd Lynn, Julien Macdonald, Savannah Miller, Jenny Packham, Aliza
Reger, John Rocha, Ashley Thomas, Justin Thornton and Thea
Bregazzi, Eric Van Peterson and Matthew Williamson.
The range of market expectations is sourced from the reports of
18 analysts dated between 13 January 2017 and 17 May 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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