Debenhams adds Patisserie Valerie to concessions, continues search for differentation
25th Jun 2015
Photo credit: Debenhams
Debenhams’ chief executive Michael Sharp believes the retailer is ‘on track’ to deliver full year results in line with expectations, despite a tricky third quarter without an underlying sales growth.
The second biggest department store chain in Britain on Thursday revealed sales at stores open over a year came in flat for the 15 weeks to 13 June. However this was an improvement of analysts’ forecasts for a 2 per cent to 0.5 per cent drop.
The results come on the back of a 1.3 per cent growth in the first half, which was helped by the shift of a key sales period from the third quarter to the second quarter. Online, sales were up 16.7 per cent across the 15 weeks, as improvements to its multichannel offering including lower delivery charges gained traction.
“Our customers tell us that, whilst they recognise the improving economic background, they remain cautious in their spending," said Sharp.
“Our wide product choice, clear destination departments and improving service proposition gives us a strong platform from which to deliver long term sustainable growth."
It’s a revealing statement from the chief executive, as Debenhams recognises the need to differentiate itself from number one rival John Lewis and the nation’s other department stores. The retailer has been busy adding new concessions to its floors in an effort to truly make itself a destination store, and a place where shoppers can stay under the Debenhams roof for longer, without having to venture further on the high street. Last year the business added Mothercare and Monsoon to its concessions as part of its ‘space optimisation programme’. This year it looks like the retailer is also keen to appeal to its customer’s stomachs. Debenhams announced this morning it would also be trialling Patisserie Valerie and Chi Kitchen at its stores.
The move is certainly an interesting one for a retailer keen to stand out. The past few years have seen John Lewis come into its own as a retailer to be relied on- a stalwart whose Christmas adverts seem to suggest its customers are in this for the long run. House of Fraser has spent the recessionary years ensuring its online operations give it an edge over competitors, and now Debenhams is searching for that special something that means customers will head there over any other rival. As shopping trips become less frequent, perhaps the destination focus will do just the trick.
Retail expert Paul Thomas from Retail Remedy wasn’t as convinced: “Debenhams’ sales, much like its image, are stuck in limbo."
“Given the tired feel of many of its older stores, some will view its dead flat sales numbers as a modest success.
“But you can’t help feeling that in many instances the once venerable brand is living on borrowed time."
While one side of the high street continues to follow aggressive discounting routes, Debenhams had begun cutting back on promotions, with three days less spent on sale in the third quarter.
It has also been investing in online ordering and delivery options and recruiting concessions to fill under-used store space, Debenhams hopes to improve choice and increase shopper numbers.
Debenhams maintained gross margin guidance for its 2014-15 year and said it was on track to achieve pretax profit expectations of £111 million, up from the £110 achieved in the previous year.
With 240 stores across 27 countries already in its arsenal, Debenhams said it was on track to add another five stores in the UK this autumn, to Bradford, Wandsworth, Rugby, Beverley and Newport.
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