Business

Debenhams says profits to outperform

Mock-up image of the Regent's Place development
Image caption Debenham's is due to move into the new central London headquarters in the summer of 2013

Debenhams has said it expects profits to beat forecasts after sales continued to grow during the summer.

Sales, excluding the effects of new store openings and the VAT rise, rose 0.4% versus last year in the last nine weeks of the retailer's reporting year.

This was a slowdown from the 1.5% rate seen in the spring, and left underlying sales down 0.3% for the full year.

Meanwhile, British Land confirmed that it had pre-let space in central London to Debenhams for its new headquarters.

The Regent's Place office, located near Regent's Park, is currently under development, with completion expected in the summer of 2013.

Debenham's has leased 145,000 sq ft (13,000 sq m) at the site for 25 years.

Discounting

Despite underlying sales having fallen slightly for the year as a whole, Debenhams said its market share grew in all product categories.

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Mr Sharp said his company had delivered a strong performance over the last two months and the sales growth came against a tough benchmark 12 months earlier.

Much of the growth came from its newly-acquired Danish subsidiary, Magasin du Nord, where Debenhams said sales have risen 4.8% since it bought the business in November 2009.

Online sales helped drive up total non-store "multi-channel" sales by 72% during the year.

UK sales during the summer period were boosted at competitors' expense via aggressive discounting.

The department store started its summer sales five days early. Mr Sharp also claimed that its "Spectacular" promotions, with 25% price cuts, had been well received.

"We believe our decision to maximise cash profit by investing in-top line growth has proven successful and this will result in headline profit before tax for the year coming in ahead of consensus forecasts," said the chief executive.

Markets had been expecting a 5% profit rise for the year, to £158m.

Shares in Debenhams rose 3.5% in early trading in London, outperforming the rest of the market.

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