Promotions overhaul leaves Debenhams third quarter sales flat

The Debenhams store in Ipswich.

The Debenhams store in Ipswich.

Department store chain Debenhams said today that moves to bring forward promotions such as its new season spectacular had left sales flat in its third quarter.

The retailer, which has 161 UK stores and more than 240 outlets worldwide, said moves to overhaul its promotional strategy as it attempts to cut back on sales and special offers reduced same store sales by around 1% over the 15 weeks to June 13.

Debenhams shifted many of its promotions into the group’s first half and said its new strategy saw three fewer days of special offers in the latest quarter.

It also heralded a 16.7% increase in online sales, up from 12.7% in the first half, after the group lowered delivery charges and improved its website.

Despite the failure to grow like-for-like sales in the third quarter, chief executive Michael Sharp said the firm had made “good progress” on its plans.

He said: “During this period we have continued to focus our promotional activity around the events Debenhams is famous for; we have made further improvements to our multi-channel proposition, including more competitive delivery charges; we have commenced further space trials with a number of exciting new partnerships; and have seen continued progress in our international operations.”

But he added: “Our customers tell us that, whilst they recognise the improving economic background, they remain cautious in their spending.”

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The group said it had been cutting down the number of days on discount for the past year and would look to add more variety into its promotions and give clarity on sales offers for customers.

Debenhams has been overhauling its pricing and online offer and is also renting out some of its under-used space to other retailers as part of a turnaround plan to boost sales.

It is launching further trials to make use of its store space, with new partners including Patisserie Valerie, BHS lighting and Chi Kitchen, a pan-Asian cuisine offer from the owners of Mango Tree.

Debenhams is also launching more concessions with sportswear retailer Sports Direct, with another four due to open by the end of the financial year, on top of four already launched.

The group said it was on track to fill more than 50% of the one million square feet of space it identified by April next year, while it is also opening five new stores this autumn, in Bradford, Wandsworth, Rugby, Beverley and Newport.

Mr Sharp said the international operations were impacted by the weak euro, although its Magasin du Nord chain saw good growth thanks to a recovering Danish economy.

With currency effects stripped out, like-for-like sales rose 2.1% in the third quarter.

Paul Thomas of retail consultancy Retail Remedy said Debenhams had “clearly lost its way” and was losing out to resurgent rivals Marks & Spencer and House of Fraser.

He said: “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.”