Christmas comes too late to save Debenhams from surprising sales fall

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DEBENHAMS posted an unexpected fall in first-quarter sales as a strong Christmas failed to undo the damage from mild autumn weather.

The firm said like-for-like sales for the 19 weeks to January 10 fell 0.8 per cent, below analyst expectations for a one per cent rise.

The fall came in the wake of the demand for winter clothing being hit by the unseasonal weather that affected much of the retail industry.

Shares in Debenhams fell as the firm also warned that weaker clothing demand and higher sales of low-margin categories meant a full-year rise in gross margin would be at the lower end of its 0.1 to 0.4 percentage point forecast. Investec analyst Kate Calvert trimmed her full-year pre-tax profit estimate by £1.6m to £111.7m.

“We remain concerned that the department stores are capital intensive and need to be furbished to a higher standard to attract shoppers,” said Cantor Fitzgerald analyst Freddie George, retaining his “hold” rating on Debenhams shares.

One bright spot was a strong improvement in Christmas trading, with underlying sales up 4.9 per cent over the four weeks to January 10.

A 570,000 sq ft Debenhams store will be one of the anchors at Westfield’s £260m shopping centre in Bradford, which is due to open in the autumn.