ANALYSTS significantly upgraded their forecasts for Debenhams after the stores group took the markets by surprise with better-than-expected interim results.
Only weeks ago, shareholders thought the company could launch a rights issue to tackle its debt mountain. But prudent stock control and better trading have all but dismissed those concerns.
Chief executive Rob Templeman unveiled a 10.7% jump in half-year profits to £104.2m and a rise in revenues from £1.03bn to £1.06bn.
Current like-for-like sales up 1.9% in the seven weeks to April 18 give cause for even more optimism, compared with a 3.6% fall in the 26 weeks to February 28. The dreaded debt mountain has also been reduced by £66.8m, to £927.2m.
Mr Templeman described the performance as a “considerable achievement”.
Debenhams’ shares yesterday closed up 22% at 77.25p as traders welcomed the positive update.
Analysts were equally impressed and broker Singer Capital Markets admitted the profit figures overshot its own forecasts by £10m.
They upgraded their current pre-tax profits forecast for Debenhams by 14% and next year’s by a massive 26%, with even more room for improvement.
Singer’s Matthew McEachran said: “Events over the past three months represent a huge momentum shift, with more still to come. Despite the upgrades, there is still scope for positive surprise – from sales margins but especially costs.”
Mr Templeman concurred: “There is much to look forward to in the second half, particularly in relation to the development of own bought product ranges with the expansion of some existing brands.”
The group has added five new stores so far this year, with nine more planned for the next two years.
Eight new international stores have also opened, taking the total to 49 in 18 countries.
The group opened its first store in the city last May, within the £1bn Liverpool One retail development.
Directors revealed their delight with its performance since opening, achieving better-than-forecast results.
And they said the flagship store continues to set the pace, with footfall in Liverpool One showing healthy progress, despite the recession.
