Strong sales in Debenhams designer ranges

Sales of designer ranges are booming in the economic and consumer downturn, department store chain Debenhams said today.

The group, which has 153 stores in the UK and Ireland, said its Designers at Debenhams ranges achieved double-digit sales growth ahead of Christmas as shoppers turned to cheaper designer equivalents in the tougher times.

The trend helped Debenhams deliver better-than-feared trading figures today, with like-for-like sales down 3.3% in the 12-week period since October 21. This compared with a decline of 4.2% for the previous six weeks and meant profits for the whole 18-week period improved on a year earlier.

Debenhams described overall trading for the Christmas trading season as “creditable” and said it achieved further market share gains.

The company’s shares, which have been battered by trading and debt fears in recent months, surged more than 25% today.

Keith Bowman, equity analyst at Hargreaves Lansdown stockbrokers, said: “The update provides hope that Debenhams could eventually prove a survivor in the capacity excessive retail sector, although it still remains far too early to call a complete recovery.”

Debenhams said a 0.6% improvement in total transaction values and the tight management of costs and stock levels drove the profits improvement.

Chief executive Rob Templeman said the company’s strategy in the current climate involved more than just tactical promotional activity.

He said: “More than ever consumers are looking for high quality products at good value prices.

“Debenhams has supplied this during the important Christmas trading period through ongoing improvements to our designs and products made over the past 18 months alongside tactical promotional activity.”

The Designers at Debenhams range includes products from Jasper Conran, Betty Jackson, John Rocha and Julien Macdonald.

Debenhams added today that its debt levels were significantly lower than a year earlier, but the company did not provide any guidance on recent reports that it planned an equity fundraising in order to lower its borrowings.

Debenhams has debts of almost £1bn (€1.1bn) after its former private equity owners heavily increased the company’s debt burden.

About 60% of the company’s debt facility is held by four banks – Royal Bank of Scotland, HBOS, Lloyds TSB and Barclays. However, the fact that two of the banks - HBOS and Lloyds TSB – are due to merge makes it less likely that existing commitments will be maintained at current levels.