Debenhams posts H1 results above forecasts

LONDON (ShareCast) - UK department store chain Debenhams (Other OTC: DBHSF - news) has posted half-year results above its forecast, reversing a decline in sales over its financial first quarter. In a trading update on Thursday, the group said like-for-like sales increased 1.3%, while pre-tax profits rose 4.3% to £88.9m during the last six months, beating expectations of profits of £84m. As a result, earnings per share were up to 5.9p from 5.6p.

Online sales were up 12.7% to £271.8m, driven by new delivery options launched on time for Black Friday and the Christmas period.

Earlier in the year, Debenham's had posted a 0.8% drop in like-for-like first quarter sales, below consensus forecast for a 1% rise, amid unseasonable weather conditions.

At the time, the group said the results reflected competition in the clothing market and its strategy to be less promotional as part of an ongoing focus to increase the percentage of full-price sales.

Chief executive Michael Sharp said customers responded well to the improved its multi-channel offer and the introduction of the premium delivery option.

"Overall we delivered a good first half performance despite a difficult clothing season in Autumn and we are on track to achieve full year expectations," he added. Investec (LSE: INVP.L - news) analysts maintained their 'sell' recommendation due to "little profit progression expected over the medium term".

The broker added: "While management is pleased with its progress towards its strategic priorities, we believe these results confirm our view that any gross margin benefit from lower markdowns/promotions will need to be reinvested into the offer." Shares (Berlin: DI6.BE - news) in Debenhams were up 4.6% to 83.26p on Thursday at 09:15.