Debenhams profits soar

Department store Debenhams has seen its pre-tax profits for the 53 weeks to September 3 increase by 10 percent to £166m.

Like-for-like sales were up 1.2 percent for the 52 weeks ending August 27, including VAT, or down 0.3 percent, excluding VAT.

Net debt at September 3, 2011, was £383.7m, down £133m from a year ago.

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Online retail contributed significantly towards profits, with gross transaction value increasing by 73.8 percent to £180.4 million and online like-for-like sales for the 52 week period increasing by 71.9 percent. New multi-channel developments during 2010 included the launch of mobile shopping through apps for the iPhone, Nokia and Android, which have so far been downloaded 650,000 times between them, and a mobile website at m.debenhams.com.

Debenhams chief executive Michael Sharp said: "Debenhams has had an excellent year with sales and profit before tax both increasing. We have demonstrated the resilience of the department store model by trading well in a challenging market.

"It is right to remain cautious about the strength of consumer confidence over the next 12 months given the uncertain economic outlook. We will therefore continue to run the business with tight management of costs and stocks, retaining as much flexibility as possible in the supply chain to enable us to deal with whatever the market presents. We will take a pragmatic approach to trading and continue to focus on maximising cash profit. Overall we are optimistic about our prospects and believe we have a clear strategy to build the business into a leading international, multi-channel retailer."

Debenhams has continued to invest in it outlets, with eleven store modernisations undertaken during the year and five completed during the first half. Six commenced in the second half and were completed in the early weeks of the 2012 financial year.

The retailer announced today a commitment to modernise its remaining 45 core stores over the next two years, starting with 20 stores in 2012. The Oxford Street flagship store will be modernised in 2013 once the head office relocation has been completed.

Three new stores opened during 2011, in Bath (opened September 2010), Wakefield (opened May 2011) and Fareham (opened June 2011). One new store is scheduled to open in 2012. Further out, the store pipeline consists of nine contracted stores, the first of which, in Chesterfield, will open in 2013. There are nearly 30 more possible new stores currently under discussion. The company also has plans to double its number of international franchise stores, currently at 65, over the next five years.

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