Debenhams sales tumble over Christmas

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Struggling department store chain Debenhams has reported a fall in sales during the crucial Christmas trading period.

In a “volatile” environment with customers seeking discounts, Debenhams reported a 5.7% fall in like-for-like sales in the 18 weeks to 5 January.

The group, which is closing 50 stores, said it would not sell any businesses while it spoke to its lenders.

Talks with lenders were “constructive”, Debenhams said.

In the shorter trading period, the six weeks to 5 January, like-for-like sales – which strip out changes to stores – were down 3.4%.

Sergio Bucher, chief executive of Debenhams, said the number of customers coming to his stores across the country “had been weak”.

A number of other retailers have released trading statements.

• Marks & Spencer saw its sales drop over the Christmas holiday period. Like-for-like sales, which strip out the impact of new stores, were down 2.2% in the 13 weeks to 29 December. Food sales fell 2.1% and its clothing and home sales division slid 2.4%.
• Tesco appeared to buck the gloomy trend. It said trading over the Christmas period had been “strong”. The company, which is the UK’s biggest supermarket chain, said its like-for-like sales over Christmas in the core UK area were up 2.2% in the six weeks to 5 January.
• John Lewis said sales in the seven-week Christmas period were 1.4% higher than for the same period last year. However, that may not be enough to secure a bonus for its staff this year, the firm added.

Mike Ashley’s Sports Direct owns nearly 30% of Debenhams and has offered a £40m investment in the chain.

Debenhams rebuffed his approach but is talking to lenders about renewing £520m of banking facilities.

In the meantime, it will postpone the possible sale of other parts of its business, including its successful operations in Denmark.

Debenhams, which employs around 25,000, said it had been cutting prices over the Christmas period and that might eat into profits in the first half of the year.

Store revamps

In October, when it published full-year results, it reported a record annual loss and said it would close up to 50 of its 165 branches.

Some of its remaining stores are being refitted to boost trading.

Nine stores so far have been revamped, with Stevenage the best performer among them, the firm said.

Mr Bucher said the improvement in the redesigned stores demonstrated his attempt to turn around the business was making progress.

“We have worked hard to deliver the best possible outcome in very uncertain times for retailers. We responded to a significant increase in promotional activity in the market, particularly in key seasonal categories, in order to remain competitive for our customers,” he said.

Online sales rose 6% in the six-week Christmas trading period, after what Debenhams described as “slow start to the season”. It said this meant there had been two-year online growth of over 20%.