Debenhams sees signs of cotton price pressure easing

The group’s spring and summer ranges are about four per cent more expensive than last year due to the recent surge in commodity prices, while it is also coping with higher inflation for its autumn and winter ranges.

But Debenhams said prices of futures in commodities such as cotton, which have rocketed in the past year, indicated that some of the pressure on consumers and the margins of fashion retailers may ease in 2012.

The group said its underlying profits increased 4.5 per cent to £129.2m in the 26 weeks to February 26, despite flat like-for-like sales as it concentrated on higher-margin private label and designer brands.

It reported its first dividend since 2008 in a growing sign of its confidence and said trading has improved in recent weeks.

Chief executive Rob Templeman, who is to step down in September to be replaced by his deputy Michael Sharp, said he “did not recognise” the drops in sales reported by other retailers in recent weeks.

Numerous retailers including HMV, Mothercare and Currys and PC World-parent Dixons Retail have warned on profits as they have struggled to pass on rising prices to cautious shoppers, so Debenhams’ prediction that costs could ease next year will come as a boost to the sector.

Mr Templeman, who has been in the role for eight years, said he was pleased with the first-half performance.

“The trading environment has been difficult but our focus on profit and cash generation has continued to deliver returns,” he said.

Debenhams said it was encouraged by strong sales from its exclusive ranges from designers such as Jonathan Saunders and Jasper Conran.

It claimed to have grown its share of the womenswear, childrenswear, cosmetics and perfume markets.

Debenhams’ Leeds store was modernised last year and the group said the store has seen strong health and beauty sales.

The group’s store at White Rose also had a makeover last year offering shoppers a range of new services and products

Debenhams is to open a new store in Wakefield in May and a new depot in Leeds in June.