At a time that the British high street is struggling to draw shoppers, one would expect the performance at Debenhams (DEB) to suffer. But the department store has defied the odds recently, and its trading over the crucial Christmas period was, to quote some analysts, "outstanding". There are a number of developments on the cards for the retailer this year too, including the possibility that a new chief executive could win over the City with a new strategic impetus. And, in the meantime, the shares offer good value and attractive income.
- Reduced discounting
- Strong Christmas performance
- Directors buying in
- Online growth/click and collect
- Poor high-street footfall data
- Portion of growth bought in
Poor high-street footfall data and disappointing sales at close rival Marks and Spencer (MKS) in the run-up to Christmas, meant the market anticipated a poor festive period for Debenhams. But sales fared much better than expected. In the seven weeks to 9 January 2016, constant currency like-for-like sales grew 3.7 per cent, comfortably ahead of forecasts and outperforming the wider deflationary backdrop. Crucially, the group had chosen to reduce its stock levels of outerwear - traditionally Debenhams' prime clothing category - which proved to be an especially good move in light of the mild winter weather. The group was also able to drive stronger sales of full-price items over discount or sale items. This was helped by a good Black Friday, where widespread promotions were kept under control, helping to lift sales of full-price items by 5 per cent.