Debenhams has predicted higher-than-previously-forecast profits and will move to a new headquarters in west London.
A summer of promotions and discounts helped to boost the department store’s figures, with like-for-like profits growing by 0.4 per cent in the nine weeks to August 27. This compares favourably with a drop of 0.4 per cent measured over the previous 43 weeks.
Debenhams stock levels are low going into the autumn season after beginning its summer sale five days earlier than usual in order to beat competitors to the mark.
Discounting and competitive pricing may see its gross margin for the full-year fall slightly, said the chain. However, profits for the year will beat City forecasts of a five per cent increase to £158m thanks to the additional sales it has made.
Debenhams chief executive Michael Sharp said prices remained competitive while it ran sales and special offers.
Sharp said: “It’s not just about starting the sale early. Customers are liking what we are doing and our Designers at Debenhams ranges.
“There will be winners and losers and we think we are well positioned to be one of the winners.”
The decision to steal a march on competitors by beginning its summer sale early helped Debenhams, which has 169 stores in the UK, Denmark and Ireland, increase its market share of premium health and beauty and clothing.
It has also noticed a rise in the popularity of its “Spectacular” promotions, where prices are reduced by 25 per cent across the store.
High commodity prices, particularly with cotton, have caused Debenhams to increase the prices of its current autumn range by an average of five per cent. However, it said prices will be up by less next year when commodity price inflation eases.
News of the department store’s higher-than-expected profits came as its plans to move to a new headquarters were revealed by the developer of a mixed use site in Regent’s Place, north-west London.
British Land said Debenhams had agreed a deal to pre-let 145,000 sq ft of office space, which will become its headquarters from the summer of 2013.
Debenhams will occupy the ground to fourth floors at 10 Brock Street for a 25-year term without break. The office space is part of a 500,000 sq ft development in the North East Quadrant.
British Land head of offices Tim Roberts said: “The letting secures long-term income on the lower floors underpinning investment value, leaving the opportunity to attract premium rents on the higher floors closer to the building’s completion date.”