Debenhams sales drop but profits may top estimates

BRITISH retailer Debenhams has said first-half sales fell after higher living costs caused consumers to spend less on clothes.

Revenue dropped 0.7% at stores open at least a year in the 26 weeks ended March 1.

Pretax profit for the first half will probably meet analysts’ estimates, however.

The company, which acquired nine Roches Stores outlets in Ireland as part of a €29 million takeover, said it expects the retail environment to remain tough this year.

It also expects the price of clothing to rise due to the higher cost of cotton and wage inflation in the Far East.

Chief executive Rob Templeman said: “Following a good performance over Christmas and the January sale, market conditions were tough through the remainder of January and February.

“The macro economic climate leads us to expect the retail environment to remain challenging.”

The company is planning to open smaller outlets in Ireland and Britain under the Desire by Debenhams name. Debenhams rebounded from a record low in London trading yesterday.

It should now be able to maintain dividends this year, said Nick Bubb, a retailing analyst at Pali International Ltd.