Shares in department store group, Debenhams plc (LSE:DEB) slumped 12.5% to 40 pence per share after the company released a trading update for the 6 month period ended 28 February 2009.
Highlights included gross transaction value up 0.3% and like for like sales excluding VAT down 3.6%. Other specific details were not released, but Debenhams did note that gross margins were expected to be higher than the first half of last year, largely thanks to “good sales growth and further progress” in expanding its own brand sales.
“The combined impact of higher gross transaction value and gross margin with the continuing tight management of costs and stocks alongside management's focus on the levers that drive cash margin will result in first half profit before tax and EBITDA being ahead of the previous year,” it added.
Debenhams also expects net debt to be lower than the first half of last year.
"We are pleased with our performance during the first half of the year given the extremely difficult trading conditions experienced across the high street. We have continued to grow our top line and to take market share as consumers increasingly recognise the great value in terms of quality, price and design that our products and especially Designers at Debenhams deliver,” said Rob Templeman, CEO.
"We have said previously that our main focus is on cash profit rather than just sales and our increase in profits during the first half despite the environment is testament to this aim and to the close management of resources throughout the business.”
Looking ahead, the retailer noted that visibility still remains poor and it expected challenging trading to continue.