UPDATE 2-Debenhams sees stable trading as profit tops hopes
* Sees "broadly neutral" trading environment in H2
* H1 pretax profit 123.6 mln stg vs f'cst 116 mln stg
* H1 gross margin up 70 basis points
* 31 weeks to April 3 like-for-like sales up 0.3 pct
* Shares down 1.2 pct
(Adds detail, CEO, analyst comments, shares)
By James Davey
LONDON, April 13 (Reuters) - Britain's second-largest department store group, Debenhams (DEB.L), expects a "broadly neutral" trading environment in 2010 despite the imminent general election after beating forecasts for first-half profit.
Chief Executive Rob Templeman said that although he was sure tax rises would come after the May 6 election other factors gave him encouragement shoppers would continue to spend, such as historically low interest rates and a higher savings ratio.
"The consumer still has more money in their pocket than they had two years ago," he told reporters. "We have got some headwinds coming, there's no doubt about that, but we've also got a lot of self-help levers that we can play upon within Debenhams," said Templeman pointing to the firm's plans to increase space, refit stores, add more own-bought ranges and grow its recent Danish acquisition Magasin du Nord.
The CEO said he backed the opposition Conservative Party's call to scrap a planned increase in National Insurance, a payroll tax, and on the prospect of a new government after 13-years of the ruling Labour Party said: "A change is never a bad thing.
Separately on Tuesday a British Retail Consortium survey said retail sales jumped at their fastest pace in a year in March although the figures were flattered by the earlier timing of Easter this year. [ID:nLAG006237]
Last week Marks & Spencer (MKS.L), the UK's biggest clothing retailer, reported better-than-expected fourth-quarter sales, while department stores and Waitrose supermarket retailer John Lewis posted a jump in Easter sales, adding to evidence that economic recovery is gaining traction. [ID:nLDE6361L8] [ID:nLDE63807G]
Shares in Debenhams, which have increased 15 percent over the last month, were down 1.2 percent at 77.4 pence at 0825 GMT, valuing the business at 1.01 billion pounds ($1.55 billion).
"The disappointment is that current trading is still little more than flat like-for-like over the last five weeks, despite the earlier Easter boost and the buoyant double-digit lfl sales growth noises coming out of John Lewis and M&S clothing in March," said Nick Bubb, analyst at Arden Partners.
Debenhams, with nearly 160 stores in Britain and Ireland and more than 50 franchised outlets overseas, made an underlying pretax profit of 123.6 million pounds in the 26 weeks to Feb. 27.
That compares with analysts' consensus forecast of 116 million pounds, according to Thomson Reuters I/B/E/S, and 104.2 million pounds made in the same period last year.
Revenue increased 8.4 percent to 1.42 billion pounds as the firm's strategy of increasing the proportion of own-brand products rather than concessions paid off.
Sales at stores open over a year were up 0.3 percent and were up by the same number for the 31 weeks to April 3.
First-half gross margin rose 70 basis points, reflecting better sourcing and less price cutting.
The firm ended the period with net debt of 511.5 million pounds, down 415.7 million pounds from a year ago.
Templeman said he is "conscious shareholders like dividends" but would not commit to a resumption in payments this year.
He dismissed media speculation of a possible bid for Finnish retailer Stockmann (STCBV.HE), insisting no talks had been held with the firm. (Editing by Julie Crust and Jon Loades-Carter) ($1=.6481 Pound)
- Protesters fell Lenin statue, tell Ukraine's president 'you're next'
- Four dead in apparent Connecticut murder-suicide
- South Korea expands air defense zone to partially overlap China's |
- Singer Susan Boyle reveals she has Asperger's syndrome: paper
- Winter storm pushes up U.S. East Coast after deep-freeze in the South