Retailer defies the downturn with sales record

Shares in the group rose eight per cent after it said it had enjoyed record sales in the final week before Christmas, as its diverse range of products from cosmetics to clothes and homewares appealed to cash-strapped consumers, while its online channels also proved popular.

The group said its level of discounts had been in line with the previous year, despite many rivals increasing their offers, and that due to a pragmatic approach to the promotional and product mix, its guidance for gross margin would remain unchanged at flat.

“We’ve succeeded in a very difficult market and have made a good start to the new year,” said chief executive Michael Sharp. “(This) clearly demonstrates that we can trade well in even the most challenging of environments.

“2011 was my 36th Christmas as a retailer and it’s no exaggeration to say that it was probably the most difficult of all I’ve traded to call.”

In total, sales at stores open over a year excluding VAT sales tax were flat in the 18 weeks to January 7. That compared with analysts’ consensus forecast of sales down 0.9 per cent from a range of flat to down 3.2 per cent.

Mr Sharp said that much of the group’s appeal was based around its wide range of products, meaning that shoppers not willing to spend large sums on new clothes or shoes were perhaps willing to buy lipstick or perfume.

He noted however that the group would remain cautious for the rest of 2012 although he said it was difficult at this stage to know whether consumer behaviour was being affected by concerns over the economy or the change in the weather compared to last year.

Warmer weather throughout October and November hit the sales of seasonal products, meaning that the group chose to discount coats and jumpers in the run up to Christmas.

The news could boost sentiment on the British high street as many retailers appeared to have had a tough Christmas, using sales to lure customers who are struggling with rising prices, muted wages growth and government austerity measures.

Debenhams has 170 stores in the UK, Ireland and Denmark, including about 10 in Yorkshire.