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Debenhams’ shares dip dragged by 0.2. percent sales fall

By Angela Gonzalez-Rodriguez

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Management |ANALYSIS

Debenhams’ stock took a dip Wednesday after the British retailer noted a 0.2 percent in like-for-like sales in the 15 weeks to June, 11. Shares in department store group Debenhams have fallen almost 6 percent after their financial release.

Speaking of its national market, Debenhams said that the UK trading environment was more uncertain since the start of 2016.

In the same vein, the retailer highlighted that clothing sales were weaker, but that non-clothing sales such as health and beauty sales had helped support its profits.

Volatility is not deterrent for Debenhams to hit goals

Now, despite volatility in the trading environment, Debenhams is confident its 2016 profit to meet forecasts.

Commenting the results, analysts explained how these results might point to tough conditions on the High Street.

"Like-for-like sales in the last three months have deteriorated and gross margin guidance cannot be upheld," said Joshua Raymond, Market Analyst at XTB.com, reports the BBC. "That paints a difficult trading environment for the retailer and as such, investors will demand the firm keeps a tight grip on cost," he concludes.

Stripping out the effect of currency movements, like-for-like sales fell 1.6 percent in the 15-week period — but were up 1.2 per cent since the start of its financial year.

Debenhams said it had responded to the shift in consumer spending by increasing promotions for clothing items while pushing sales of non-clothing items, such as health and beauty products, as published by the ‘Financial Times’.

Analysts on average expect Debenhams to report pre-tax profit of 119 million pounds, according to Reuters.

Meanwhile, Debenhams PLC (LON:DEB) had its stock rating reiterated as ‘Hold’ in a report released by analysts at Jefferies International. They now have a target price of 75 on the company’s stock. According to the analyst this now indicates there is a potential increase of 7.6 percent from Debenhams PLC’s current price of 69.7 pounds.

Image: Debenhams Web

Debenhams