Debenhams, Britain's second largest department store group, said it would beat forecasts for full-year profit and net debt after price cuts drove sales and won it market share in a tough trading environment.
Shares in Debenhams, which trades from 169 stores in Britain, Ireland and Denmark, and 64 franchised outlets in 25 countries, rose 2.5 per cent after it also said today it expected to make further progress in its next financial year.
"In this sort of market there are inevitably winners and losers, and I believe Debenhams is well positioned to continue to be one of the winners," chief executive Michael Sharp, who succeeded Rob Templeman earlier this month, told reporters.
Debenhams, ranked second after employee-owned department store chain John Lewis , said while its gross margin for the 53 weeks to September 3rd would be flat to slightly down versus 2009/10, underlying pretax profit should be ahead of a market forecast for about £158 million.
Finance director Chris Woodhouse said he expected a new consensus to settle at about £164 million. Year-end debt would be about £385 million, down £130 million since the start of the year and compared with previous guidance for about £400 million.
Debenhams' strategy is to drive profits by investing some of its gross margin into pushing top-line sales.
Mr Sharp said this strategy could change in the key Christmas trading season. "Depending upon how we find the market during the course of the autumn/winter season and where we are on pricing versus the competition and the strength of consumer confidence, we will react accordingly."
In common with rivals, such as Next , he expects selling price inflation to peak during the autumn/winter season, with like-for-like prices up about 9-10 per cent, before easing in spring/summer 2012 as input cost pressures, particularly cotton, moderate.
Reuters