UPDATE 4-Debenhams sees another cut-throat Christmas
* Year profit 125.2 mln stg vs forecast 122.7 mln
* Like-for-like sales up 0.6 pct in 7 weeks to Oct. 17
* Net debt down to 590 mln stg, more paid off since year end
* Chairman John Lovering to step down in March
* Shares down 0.9 pct, reversing earlier gains
(Adds UK retail sales data, updates shares)
By Mark Potter
LONDON, Oct 22 (Reuters) - Sales promotions will be as rife this Christmas as they were last year, department stores group Debenhams (DEB.L) predicted on Thursday, warning the consumer outlook remained uncertain despite signs of economic recovery.
"I think it will be as promotional as last year," Chief Executive Rob Templeman told reporters when asked about his expectations for the festive season. "I can't predict what the others will do. We're planning on it being promotional.
"Although we think there's some signs the wider macro-economy is improving, we still think it's difficult to predict consumer behaviour," he added.
Markets in general, and retail shares in particular, have rallied strongly in recent months on hopes of economic recovery.
But retail billionaire Philip Green told Reuters on Thursday markets had got "way ahead of themselves" and business would be tough in 2010 with taxes and unemployment rising. [ID:nLM407489]
Government data also showed that British retail sales failed to grow for a second month running in September, confounding expectations for a 0.5 percent rise. [ID:nONS006580]
Debenhams, which held two, extended "up to 20 percent off" pre-Christmas sales last year, posted a 14 percent rise in profit before tax, goodwill and one-off items to 125.2 million pounds ($207.1 million) for the year ended Aug. 29.
That was at the top end of expectations, helped by strong demand for the group's "Designers at Debenhams" ranges by fashion setters such as Matthew Williamson and Julien Macdonald.
Sales at stores open at least a year fell 3.6 percent, but were up 0.6 percent in the seven weeks to Oct. 17.
Debenhams, with over 150 stores in Britain and Ireland and more than 50 franchised outlets overseas, also said Chairman John Lovering would step down in March, and brought in Nigel Northridge, chairman of bookmaker Paddy Power (PAP.I), as a non-executive director.
"A very solid update," said Singer analyst Matthew McEachran, forecasting analysts' consensus profit forecast for the current financial year would edge up.
HUNGRY FOR ACQUISITIONS
Debenhams shares have almost quadrupled in value this year, helped by a 323-million-pounds equity fundraising in June which put an end to worries about its debts.
The firm had been dogged by concerns about its borrowing since returning to the stock market at 195 pence a share in 2006 after two-and-a-half lucrative years in private equity hands.
Debt fell by over 400 million pounds to 590.3 million in the year ended Aug. 29 and the firm said it had repaid 100 million more since then.
At 0843 GMT, Debenhams shares were down 0.9 percent at 82.35 pence, after earlier rising to 84.9 pence.
Templeman said Debenhams had 100 million pounds left over from its equity fundraising which, along with a 250 million pound bank facility and annual free cash flows of around 100 million pounds, gave it plenty of firepower for acquisitions.
"We still have capacity and we still have hunger to look for acquisitions," he said on a conference call, adding he was interested in both stores and brands.
He declined to comment on speculation Debenhams might pounce on rivals House of Fraser or Aurora Fashions.
Templeman said the firm planned to invest around 95 million pounds in the current financial year, including opening six new stores, restarting a shop refurbishment programme and investing in its Web site, including adding the capacity to ship abroad.
Debenhams will also relaunch the Principles brand it bought earlier this year in collaboration with designer Ben de Lisi and introduce H! by Henry Holland, targeting 15 to 25 year olds. ($1=.6045 pounds) (Editing by James Davey and Mike Nesbit)
