Christmas sales drop at Debenhams

Department store Debenhams saw its group like-for-like sales drop 1.3% over Christmas and it has warned that the market remains "volatile and highly competitive".

In the 17 weeks to 30 December, group like-for-like sales in constant currency declined -1.8%, with UK like-for-likes down -2.6% and international sales up 2.1%. Online performed well with sales up 9.9% during the period.

"The early weeks of the quarter were disappointing as the market remained volatile and competitive. We took tactical promotional action to improve our performance which resulted in a stronger 6 week Christmas period against tough comparatives, with [like-for-like] sales up 1.2% in constant currency and digital growth of 15.1%," today's trading statement read.

The retailer said the first week of its Sale had been disappointing despite further markdowns, particularly in the seasonal gifting sector and it has warned that its half one gross margins are now expected to be c150bps down on the prior year "as a result of the promotional market and to deliver a clean end-season stock position".

Weaker demand in some discretionary areas in the UK had led to a more promotion-driven market, to which Debenhams said it had responded to remain competitive. However it said it had grown share in beauty and food while fashion continued to decline and gifting was "disappointing".

The business also said it had witnessed positive momentum in digital sales with smartphone sales up 36% year-on-year and conversion rates up 20%. It had also seen positive signs of improvement as a result of its Debenhams Redesigned transformation strategy with encouraging early signs from its new format store trials including new stores at Stevenage and Wolverhampton and its first "right-sized" store in Uxbridge.

"The market has been challenging and particularly promotional in some of our key seasonal categories and we have responded in order to remain competitive for our customers, which has impacted our profit performance," said CEO Sergio Bucher.

"Nevertheless, we are seeing positive early signs from the changes we have made as part of our Debenhams Redesigned strategy. The market dynamics we have seen have reinforced our view that we need to move even faster to implement the cultural and organisational changes needed to ensure Debenhams is in the best possible shape for today's fast-changing retail environment," he added.