Lipstick factor puts gloss on Debenhams’ sales

The UK’s second biggest department store group, which trades from 169 stores in Britain, Ireland and Denmark and 64 franchised outlets in 25 countries, said it was winning market share and would meet expectations for 2011-12 pre-tax profit of about £158m.

Debenhams said sales at stores open over a year, excluding VAT sales tax, were up 1.5 per cent in the 17 weeks to June 25, boosted by strong sales of cosmetics.

“It’s probably one of the most resilient areas in the market, health and beauty. Everybody calls it the lipstick factor, that people still buy health and beauty whatever,” chief executive Rob Templeman said.

He said new fashion lines from its Designers at Debenhams range, such as Principles by Ben de Lisi and H! by Henry Holland, had also sold well.

While a host of other retailers have complained about a fresh dive in consumer confidence, Mr Templeman said Debenhams’ sales trends had got stronger in recent weeks.

“June has been a good month for us,” he said.

However, he explained sales gains had been achieved in part through increased discounting.

“Because of the inflationary pressures and lack of growth in disposable income, we’ve chosen to drive cash margin by investing some of our gross margin gains into pushing top-line sales, and clearly that’s working,” he said.

Mr Templeman said he expected some easing of inflationary pressures in late spring 2012, due to commodity price falls and currency gains working through the supply chain.

He added the firm has not yet spoken to the administrator of Jane Norman. There has been speculation Debenhams may buy the brand or residual stock.

Debenhams, ranked second after employee-owned department store John Lewis, forecast year-end net debt of about £400m.

It has seven stores in Yorkshire, employing 1,750 people.