Debenhams unveils social shopping strategy as earnings fall

Debenhams' group earnings before interest, tax, depreciation and amortisation fell by 2.5% to £149.1m in the 26 weeks to 4 March with UK EBITDA down 6.0% and international EBITDA up 13.1%.

The group also announced a new strategy, 'Debenhams Redesigned', to deliver growth by becoming a "destination, digital and different; and to drive efficiency by simplifying and focusing our business".

It said group gross transaction value rose by 2.9% to £1,676.5m (H1 2016: £1,628.7m), with UK LFL up 0.5%, reflecting further progress in growing non-clothing categories and strong online momentum

Other highlights:

- Group gross margin rate down 30 bps, with further 50 bps markdown improvement on last year offset by sales mix dilution. Full price sales mix grew 2%

- UK online performance driven by mobile orders up 64%

- Underlying international performance remains mixed. Magasin du Nord in Denmark saw a tougher trading environment while the business in ROI benefited from restructuring under examinership

- Group profit before tax in line with market expectations, down 6.4% to £87.8m (H1 2016: £93.8m).

- Earnings per share of 5.8p (H1 2016: 6.2p)

- Net debt reduced to £216.9m (H1 2016: £224.2m) delivering net debt/EBITDA at 0.9x. Continued cash generation supports maintained interim dividend per share of 1.025p.

Chief executive Sergio Bucher said: "Our customers are changing the way they shop and we are changing too. Shopping with Debenhams should be effortless, reliable and fun whichever channel our customers use.

"We will be a destination for 'Social Shopping' with mobile the unifying platform for interacting with our customers.

"If we deliver differentiated and distinctive brands, services and experiences both online and in stores, our customers will visit us more frequently and, having simplified our operations to make us more efficient, we will be able to serve them better and make better use of our resources.

"I'd like to thank the executive team and all our colleagues, who made sure that we were able to deliver a great experience for our customers over the peak trading period, and who are now working hard to implement our new strategy.

"This will set Debenhams on course for a successful and profitable future."