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Profits slip at Debenhams but transformation is underway says CEO

Lauretta Roberts
26 October 2017

Underlying profits at Debenhams were down 16.6% to £95.2m in the year to 2 September as the department store group continues its transformation via its Debenhams Redesigned strategy.

Gross transaction value at the group was up 2% at £2,954.1m while EBITDA was down 7% at £217m. Like-for-like sales grew 2.1% while UK like-for-likes were flat, which the group said reflected "growth in Destination categories; strong digital momentum; and a weaker H2 trading environment".

Beauty sales were up 5%, food was up 8% but clothing was down 0.5% which it said was inline with the market as a whole. Digital sales grew 12.7%, driven by mobile orders up 57% in the UK.

Under CEO Sergio Bucher, who joined from Amazon last year, the business is undertaking a transformation programme, Debenhams Redesigned, which places the emphasis on in-store experience and digital. Bucher said key steps had already been taken including the recent upgrade of its mobile website in partnership with Mobify and the investment in on-demand hair and beauty services provider Blow LTD whose service bars will be installed in Debenhams stores.

The group has also announced a partnership with Sweat! to trial gyms, initially in three stores, and has promised there will be more partnerships to come as the business as identifies "opportunities to create compelling destination categories; drive customer frequency; and build leadership in the category we define as Social Shopping."


New format trial at Stevenage

In addition Debenhams has established "test labs" for new format trials in its new Stevenage and Wolverhampton stores, which it says are delivering "very positive initial results". It has also confirmed its "exit from a number of activities". As previously announced it has closed 10 regional warehouses and has exited four franchise markets. And it has revealed it will close two stores in early 2018.

"We are making good progress with implementing our new strategy, Debenhams Redesigned, and are encouraged by the results from our initial trials, as well as the number of exciting new partners who want to work with us. There is a lot to do but I am delighted with the enthusiasm and flair shown by my colleagues as we embark on this journey. I'd like to thank the whole team for delivering these results against a background of rapid change in the business.

"The environment remains uncertain and we face tough comparatives over the key Christmas weeks. However, we are well prepared for peak trading and the early signs from our activity to date confirm that we are moving in the right direction towards a successful and profitable future for Debenhams," Bucher said.

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