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Debenhams reports 39% boost to online sales

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Debenhams today reported 39% growth in its online sales over the Christmas period, contributing to the retailer’s highest-ever December sales.

The department store group recorded the jump in online sales in the 18 weeks to January 5, a period in which total sales grew by 3.5% and like-for-like sales, which strip out the effect of store openings and closures, by 2.9%. In the five weeks to January 5 alone, like-for-like sales grew by 5%. In an interim management statement published today, Debenhams said its highest-ever December sales had come as customers shopped later in the season in a more discount-driven environment. But its move to boost promotions meant that gross profit margins would be cut from previous forecasts, coming in at 10 basis points (bps) higher than last year rather than 20bps.

Ecommerce accounted for 12.6% of total sales in the period, up from 9.3% at the same time last year. But the growth in ecommerce comes at a price, with the cost of warehousing and logistics set to rise to 3.5% of sales, from the previously forecast 3.2%.

Elsewhere the department store said its focus would be on international expansion. It now has 73 international stores following five openings during the period in markets including Bulgaria and Georgia, and expects to increase that number to 150 over the next five years. It will also continue a store modernisation programme that has seen 18 stores upgraded over the last year.

Debenhams chief executive Michael Sharp said the department store had focused on meeting customers’ needs during the period. “We continue to believe that whilst consumers have become acclimatised to the new economic reality, we don’t anticipate a significant change in consumer confidence in the remainder of the year,” he said. “We remain committed to prudent investment in key areas of the business to deliver long-term sustainable growth as well as driving shareholder value.”

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