21st Oct 11
Debenhams to carry out store expansions
by Harry Oldfield
Rooms for expansion: Debenhams confident about UK high street
Rooms for expansion: Debenhams confident about UK high street
The new boss of Debenhams insisted that the high street in the UK was “alive and well” as he unveiled plans to modernise an additional 25 outlets and open nine new stores during the coming four years.
The department store chain’s expansion drive, which is set to create 4,050 new jobs, comes on the back of 20 store refurbishments which the company announced in June. Michael Sharp, the chief executive, described the expansion as a strong signal regarding its commitment to the British high street, which he insisted the retailer was backing 100 per cent.
Debenhams, which operates 163 outlets across the UK and Ireland, hopes to increase its store portfolio in the UK to 240. The nine new outlets will open their doors for the first time between 2012 and 2015 in Burton upon Trent, Bradford, Chesterfield, Darlington, Macclesfield, Hereford, Barnsley and Carlow and Sligo in Ireland.
The expansion update arrived as the retailer said that pre-tax profits went up 10 per cent to 166.1m during the 53 weeks ending 3 September as it reaped the rewards from selling more higher margin exclusive ranges. The company said that the amount of its international franchise outlets will double to 130 during the next five years.
The chief executive, who took over the role last month, said that this is a strong indication that the high street is far from dead and that they are supporting it 100 per cent. He added that it also highlights a real commitment to the retailer’s clear focus on expanding its UK retail business.
Debenhams has already modernised 14 outlets in the UK since spring 2010. Last week the chain announced that 6,500 seasonal jobs would be created during the run-up to the festive period.
The company’s full-year profits improved in spite of a fall in like-for-like sales of 0.3 per cent excluding VAT. Its margins came under pressure as it had to offer more discounts to remove stock and it found it difficult to pass on increasing cotton prices to shoppers.
However, this was offset partly by the growing popularity of its higher-market exclusive products like its Designers at Debenhams ranges. The retailer’s discounting tactic helped it boost share in the majority of its markets, including premium health and beauty, casual womenswear, childrenswear and menswear.
Debenhams also revealed it is to begin returning cash to shareholders via a share buy-back initiative. Shares rose one per cent on the back of the announcement.
But Seymour Pierce analyst Kate Calvert said that the announcement that the firm plans to launch a share buy-back scheme confirms to them its limited growth prospects for the next few years, adding that they feel it is slightly premature given the condition of the UK consumer.
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