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Debenhams today said it expects to beat last year's profits despite a drop in sales, thanks to shoppers trading down from luxury labels to its designer ranges.
“People who normally buy more expensive brands are recognising the quality of Designers at Debenhams,” chief executive Rob Templeman said. “Some of our regular customers are trading up too.”
Strong sales of these designer collaborations — which includes designs by Matthew Williamson and Jasper Conran — have helped improve margins, he explained.
Henry Holland, the London fashion Week designer best known for his slogan T-shirts, was added today to Debenhams' portfolio of tie-ups in a bid to get teenagers and 20-somethings to spend more in store.
Templeman said: “A lot of young customers come to the cosmetics hall. We are giving them another reason to shop here.”
But like-for-like sales slid 3.8% in the six months to the end of August as stores were disrupted by a major revamp. Debenhams is replacing concession stalls with its own, more profitable, ranges.
Templeman also suggested that the department store chain could go on a shopping spree itself, after its £323 million cash raising in June.
Some analysts gave talk of acquisitions short shrift, however, believing Debenhams will choose instead to reduce its debts.
Templeman refused to join some of his counterparts in calling the end of the High Street slump, however, warning consumer spending remains “unpredictable”.
He said: “Unemployment remains a worry, but at least the housing market is starting to pick up.”
The Debenhams boss said he was “happy” with analysts forecasts for pre-tax profits of around
£122.4 million for the year, up from £110 million last year.
