High street mainstay Debenhams vowed to regroup yesterday after half-year profits plummeted following a disastrous Christmas trading performance.
The fightback by the department store chain will see a number of “well-known” brands introduced into its 158-strong UK store estate and investment made to speed up delivery times in its online operation.
The moves, outlined by chief executive Michael Sharp, follow a “challenging” period for the retailer in which profits fell 24.5% to £85.2 million in the 26 weeks to March 1.
Debenhams had alerted the City to the slide in profits on New Year’s Eve after weak trading in September and October was compounded by a difficult festive period.
“Promotions are a traditional strength of Debenhams, but in the run-up to Christmas their impact was diluted by the highly promotional trading environment in the UK,” the company said as it revealed its first-half trading figures yesterday.
“We are therefore refocusing our promotional strategy, which will see more clearly defined promotional periods in the trading calendar with fewer days on promotion.”
The firm said analysis carried out on its shop estate had found that 10% of its UK store space was currently under-performing while acknowledging that it lagged behind rivals in terms of online shopping convenience.
It said it was stepping up investment in the automation of its distribution centres to ensure that its premium delivery service was up to scratch ahead of Christmas 2014.
“We continue to work on a number of routes to improve sales densities,” the high street stalwart said.
“These include adding more choice of products, brands and services. We are currently in discussions with a number of well-known brands, some of which are expected to be trialled over the next six months.”
Debenhams is planning to add 14 new stores to its overall estate, increasing available retailing space by 8.5% extra space over the next four years. The new stores will be sized and configured to take account of multi-channel retailing and the burgeoning demand for click-and-collect services.
Liz Faulkner, a retail consultant at Conlumino, added: “In a highly competitive marketplace with multi-channel behemoths like John Lewis and Next, Debenhams’ market will remain challenging. But, with continued initiatives bringing its brand-led proposition up to speed, it isn’t out of the race quite yet.”
Despite the profits fall, shares in Debenhams closed the day up 4.45% at 81p.