Debenhams today put the focus on growing digital sales through a focus on mobile as it warned that full-year profits could come in as low as £35m, from a previously expected £50.3m.
The department store group, a Leading retailer in IRUK Top500 research, said that increased competitor discounting and weak key markets meant that trading for May and early June was lower than it had expected. Revenue, as measured through group gross transaction value, fell by 1.5% in the 15 weeks to June 16, and by 1.6% in the 41 weeks of the financial-year-to-date . Like-for-like sales, which strip out the effect of store openings and closures were down by 1.7% in the 15 week period and by 2.1% in the 41 weeks.
But digital sales grew by 16% over the 15 weeks, and by 11.5% in the year-to-date. That suggests an improvement that Debenhams said it would now take forward as one of its five priorities for growth. It says that its work to improve its website and its accelerated focus on a mobile platform has driven that digital growth. It has appointed a new head of digital in order to lead that focus.
“We see clear evidence of progress as our digital growth outperforms the market and customers respond positively to our product improvements and format trials,” said chief executive Sergio Bucher.
Elsewhere Debenhams plans to boost its position in a declining and highly competitive beauty market by finding new ways to engage with customers both in-store and online. It is currently trialling a multi-brand format that it says will “significantly broaden our brand offer in smaller stores,” and pointed to new exciting developments that it would start to roll out in September.
It is also redesigning the in-store experience through new services and presentation. “New format trials are delivering a better customer experiences higher sales densities and lower markdown,” it said, adding: “We are working on plans to reduce roll-out costs whilst capturing the majority of expected benefits.” Work to reinvent Designers@Debenhams is underway while the retailer is also operating new furniture concessions in partnership with Maisons du Monde and online retailer Swoon Editions. Costs are also being reduced and Debenhams said today that it expects to save more money than previously announced, while a new leaner operating model would improve efficiencies for the future.
Bucher said: “It is well-documented that these are exceptionally difficult times in UK retail and our trading performance in this quarter reflects that. We don’t see these conditions changing the near future and because it is our priority to maintain a robust balance sheet we are making very careful choices about how we deploy capital.”
Image courtesy of Debenhams