Debenhams PLC on Jan. 10 said that despite seeing a dip in sales during the holiday season, it is on track deliver fiscal 2019 profits in line with market expectations due to identified cost savings.
For the six-week period to Jan. 5, group like-for-like sales were down by 3.4%, or 3.5% at constant currency. U.K. outlets saw a sales decline of 3.6% due to weak footfall in physical stores. Meanwhile, there was a 6% growth in group digital sales.
All in all, group gross transaction value declined by 3.8%, versus a growth of 3.6% in the year-ago period.
"We responded to a significant increase in promotional activity in the market, particularly in key seasonal categories, in order to remain competitive for our customers," CEO Sergio Bucher said.
Debenhams, which has £520 million in committed debt facilities, said its net debt as of Jan. 5 is at £286 million. It also announced that, given the requirement to refinance existing bank facilities within the next 12 months, it will put on hold any further asset disposals until discussions with lenders reach an outcome.
The department store operator raised its annualized cost savings target for 2020 to at least £80 million from the previous £50 million.
The company added that its New Beauty strategy led to a market share increase in skin care while its revitalized product drove improved market share in womenswear. Its differentiated gift offering also delivered an improved margin performance.
In addition, nine of the Debenhams' stores that operate under a new design format outperformed its core chain during the holidays.