Department store chain Debenhams PLC (>> Debenhams Plc) said Thursday it faces a tough consumer climate for the remainder of the year as economic conditions continue to restrain spending, adding to the tide of downbeat news from U.K. retailers this week, even as it posted a small rise in first-half net profit.
"We are pleased with our results for the first half," said Chief Executive Michael Sharp in a statement, adding, "We are mindful of the impact the wider economy may have on consumer behavior in the second half of the year as well as the uncertain effects of the major one-off events taking place in the U.K. during the summer."
For the six months to March 3, Debenhams posted a net profit of GBP95.5 million, up from GBP91.5 million in the same period a year earlier, on revenue 1.4% higher at GBP1.48 billion. Same-store sales excluding value-added tax--which applies to stores open for more than a year--were up just 0.3%.
Debenhams said pretax profit--the company's key measure of performance--was up slightly at GBP127.1 million from GBP125.3 million, above analyst consensus expectations, according to Debenhams.
An interim dividend was maintained at 1 pence a share. The company added that it intends to use up to GBP20 million to buy back shares over the next six months.
The retailer's focus on price cuts and sales promotions has seen it fare better than many of its rivals in recent years as high fuel and commodity inflation, tax rises and concerns about job security have caused consumers to rein in discretionary spending.
Debenhams' earnings come after a difficult week for U.K. retailers. Earlier this week, Marks & Spencer Group PLC (>> Marks and Spencer Group Plc) said like-for-like sales fell in the fourth quarter, while Tesco PLC (>> Tesco PLC) Wednesday reported declining full-year profit from its U.K operations.
Shares closed Wednesday 80.5 pence.
-By Peter Evans, Dow Jones Newswires; 44-20-7842-9308; [email protected]
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