Over the six weeks to 5th January 2019, Debenhams saw gross transaction values fall by -3.8%, and a LFL sales decrease of -3.4% – trade in the UK declined by -3.6%, with weak store footfall offset by online growth.
Supported by improved mobile conversion and customer experience, digital sales rose +6.0% in the period, against strong comparatives.
Volatile market conditions led the retailer to reinstate various promotions, which will erode gross margins for H1 – yet Debenhams remains cash-generative and on-track to deliver current year profits in line with expectations (albeit supported by further cost savings).
Chief executive Sergio Bucher says: "We have worked hard to deliver the best possible outcome in very uncertain times for retailers. We responded to a significant increase in promotional activity in the market, particularly in key seasonal categories, in order to remain competitive for our customers. We have taken decisive steps to maintain rigorous cost and capital discipline and I am grateful to my colleagues for their hard work as we maintain a rapid pace of change.
"In order to ensure that Debenhams has a sustainable and profitable future we need a strong customer proposition, a strengthened balance sheet and a reshaped store portfolio. We have a robust plan to deliver this and while there is much work still to do, the performance of our Redesigned stores over peak, and continued outperformance in digital, reinforce our view that we are taking the right steps to protect the future of the business."
Debenhams must refinance its existing bank facilities within the next 12 months, so has commenced discussions with lenders and placed any asset disposals on hold.