Debenhams third quarter sales hit by ‘volatile’ market

Department store chain Debenhams has reported a fall in sales amid “volatile” trading conditions.

Like-for-like sales dropped 0.9% in the 15 weeks to June 17, with May being a particularly tough month for the retailer.

Debenhams warned that its 2017 profits should be in the expected range, but added that if market volatility continued, profits could be at the lower end of forecasts.

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In the 41 weeks to the same date, Debenhams like-for-like sales were up 1.8%, but down 0.7% at constant currency, with group gross transaction value up 1.7%.

But digital sales growth was strong, up 7.9% for the 15 week period, and 12.6% for the 41 week, driven by mobile demand which was up 47% year-on-year.

The results come two months after Debenhams announced that it was considering closing 10 of its stores in a bid to cut costs and drive efficiency.

The department store chain said it plans to review up to 10 of its 176 UK stores for closure over the next five years.

A central distribution centre based in Northamptonshire and 10 smaller warehouses could also close under the new strategy.

The retailer also aims to become a destination for “social shopping” by offering new products, services and experiences both online and in store.

New CEO Sergio Bucher said Debenhams is already making headway with these plans.

“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.”

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