Debenhams 'Making Progress' Despite Sales Dip

Debenhams (Other OTC: DBHSF - news) has reported a slight drop in sales over the three months to mid-June, saying customers were continuing to be "cautious" with spending.

Revenue for the retailer was down 1% in the quarter, but despite the failure to grow like-for-like sales chief executive Michael Sharp insisted it was making "good progress" on a turnaround plan.

This includes reducing the number of days in the year on which it offers discounts.

An overhaul of its online offer resulted in a 16.7% increase in online sales. This improvement was put down to a combination of lower delivery charges and improvements to the Debenhams' website.

Commenting on the latest figures, Mr Sharp said: "During this period we have continued to focus our promotional activity around the events Debenhams is famous for.

"We have made further improvements to our multi-channel proposition, including more competitive delivery charges; we have commenced further space trials with a number of exciting new partnerships; and have seen continued progress in our international operations."

But he added: "Our customers tell us that, whilst they recognise the improving economic background, they remain cautious in their spending. "

As part of its efforts to boost revenue, the retailer is also renting out some of its under-used space to other retailers.

It is launching further trials to make use of its store space, with new partners including Patisserie Valerie, BHS lighting and Chi Kitchen, a pan-Asian cuisine business from the owners of Mango Tree.

The group said it was on track to fill more than 50% of the one million square feet of unused space it identified by April next year.

It also plans to open five new stores this autumn, in Bradford, Wandsworth, Rugby, Beverley and Newport - it currently has 161 UK stores and 240 across the world.

Shares (Berlin: DI6.BE - news) in Debenhams edged 1% higher in early trading as investors took heart from the firm's assurances on prospective sales growth.