Debenhams suffers sales struggle over Christmas

Department store chain Debenhams has reported a 3.4% drop in group like-for-like (LFL) sales for the six weeks to 5 January.

Group gross transaction value for the period declined by 3.8%, and and overall UK sales declined by 3.6%, with weak store footfall offset by growth in digital.

For the 18 weeks to  5 January, group gross transaction value declined by 5.6%, with LFL also down 5.7%. UK sales declined by 6.2%, with international sales down 3.5%, however, digital sales grew by 4.6% across the period.

The retailer said the the UK trading environment has “continued to be volatile, as expected”, and added that there is clear evidence that its customers have been “seeking out promotions”.

As a result the group reinstated some “tactical promotional activity” in order to be competitive and manage inventory tightly, which it said will result in some “gross margin erosion in the first half”.

CEO Sergio Bucher, said: “We have worked hard to deliver the best possible outcome in very uncertain times for retailers. We responded to a significant increase in promotional activity in the market, particularly in key seasonal categories, in order to remain competitive for our customers.

“We have taken decisive steps to maintain rigorous cost and capital discipline and I am grateful to my colleagues for their hard work as we maintain a rapid pace of change. In order to ensure that Debenhams has a sustainable and profitable future we need a strong customer proposition, a strengthened balance sheet and a reshaped store portfolio.”

He added: “We have a robust plan to deliver this and while there is much work still to do, the performance of our Redesigned stores over peak, and continued outperformance in digital, reinforce our view that we are taking the right steps to protect the future of the business.”