Debenhams cautious about summer events

London: Debenhams cautioned over the impact of the series of high-profile events taking place over the summer, warning that the effect on shoppers was "unknown".

Michael Sharp, chief executive, said the Queen's diamond jubilee "should bring a feel-good factor" as the Royal Wedding did last year.

The European football championships will boost sales of televisions and barbecues, while 11 million people were due to visit the UK for the Olympics, "and may visit their first ever Debenhams store".

However, he added: "I don't know about the combination of all three together. That is the unknown."

His more cautious outlook contrasts with the enthusiasm at some retailers, such as J Sainsbury, which has forecast that the supermarket chain could receive a sales boost similar to Easter over the long jubilee weekend in June.

Sharp added: "If it gives retailers a benefit, we will benefit from that."

Debenhams had been planning for some time for possible disruption to deliveries from the Olympics, he said.

Sharp also said the department store chain had suffered from none of the stock problems that dragged down Marks and Spencer's clothing sales in the past three months.

In the eight weeks to the end of February, sales from Debenhams' UK stores open at least a year rose 2.4 per cent.

Group like-for-like sales were up 0.3 per cent in the six months to March 3. The gross margin, the difference between the price at which a retailer buys in goods and sells them, fell by 0.3 percentage points, including the 1.4 percentage point benefit from the Magasin du Nord chain. Excluding this chain, the gross margin fell by 0.5 percentage points.

Sharp said that reflected higher input costs and increased sales from the lower margin health and beauty category, rather than heavy discounting in the run-up to Christmas. He said the level of cut-price goods as a percentage of sales in the first half was exactly the same as in the previous year.

Debenhams also plans to buy back £20 million (Dh118.38 million) of shares over the next six months, after its net debt fell by £71.9 million in the first half to £311.8 million.

Pre-tax profit rose from £125.3 million to £127.1 million in the six months to March 3, on sales up from £1.22 billion to £1.24 billion.

An unchanged interim dividend of 1p is payable from earnings per share of 7.4p (7.1p).

— Financial Times