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Debenhams says the overall market had seen more promotions than the prior year which resulted in some increase in its own promotional activity in the run-up to Christmas. Photo: Ben Stansall/AFP (Ben Stansall/AFP)
Debenhams says the overall market had seen more promotions than the prior year which resulted in some increase in its own promotional activity in the run-up to Christmas. Photo: Ben Stansall/AFP
(Ben Stansall/AFP)

Debenhams posts record Christmas sales

Growth boosted by strong demand online, with sales over the 18 weeks up 39%, ahead of the firm’s expectations

London: Debenhams, Britain’s No. 2 department store group, posted record Christmas sales, driven by a jump in online trade and a step-up in promotions.

The group said on Tuesday sales at stores open over a year, rose 5% in the five weeks to 5 January, with like-for-like sales in the 18 weeks to 5 January—a big chunk of the firm’s fiscal first half—up 2.9%.

That compares to analysts’ consensus forecast for the first half to end-February of an increase of 2%.

The growth was boosted by strong demand online, with sales over the 18 weeks up 39%, ahead of the firm’s expectations.

However, it also had to rely on promotions to draw in the customers. Debenhams said the overall market had seen more promotions than the prior year which resulted in some increase in its own promotional activity in the run-up to Christmas.

As a result, it now expects gross margin for the 2012-13 year to be 10 basis points higher than last year rather than 20 basis points previously guided.

“We continue to believe that whilst consumers have become acclimatized to the new economic reality, we don’t anticipate a significant change in consumer confidence in the remainder of the year," said chief executive Michael Sharp.

Many store groups are finding the going tough as consumers fret over job security and a squeeze on incomes.

Debenhams has generally bucked the gloomy trend, helped by its breadth of products, appeal to a wide range of customers, multiple routes to market and well received marketing campaign.

The firm’s variety of product categories, with a core clothing offer supplemented by accessories, homewares and health and beauty, means it is also less exposed than other retailers to the vagaries of Britain’s weather.

Separately on Tuesday, an industry survey said British retail sales rose 0.3% in December. With annual consumer price inflation currently running at 2.7%, this suggests that stores sold less in real terms, increasing the chance that Britain’s economy slipped back into contraction in the last three months of 2012.

Last week, Next, Britain’s No. 2 clothing retailer, reported a 3.9% rise in total sales for the eight weeks to 24 December and raised its year profit guidance. However, clothing market leader Marks and Spencer is forecast to report a further decline in general merchandise sales when it updates on its third quarter on Thursday.

Shares in Debenhams, which have doubled over the last year, closed Monday at 117 pence, valuing the business at £1.47 billion ($2.36 billion).

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