Britain’s Debenhams, ASOS buck retail gloom

British retailers Debenhams and ASOS laid out plans to deliver future growth overseas as their rising profits showed their resilience to weaker home market conditions.

By James Davey (Reuters)

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Published: Thu 25 Oct 2012, 6:02 PM

Last updated: Tue 7 Apr 2015, 12:28 PM

Both Debenhams, Britain’s No. 2 department store group, and ASOS, the fast-growing online fashion retailer, have bucked the gloomy trend in the sector, dogged by weak consumer confidence.

Shares in Debenhams, up 59 percent over the last year, rose 6 percent after it increased its target for online sales to 600 million pounds ($961.8 million) from 500 million through the next three to five years.

The group also upped its target for overseas franchise stores from 130 to 150, with a focus on new openings in the Middle East and Asia.

Debenhams currently trades from about 170 stores in Britain, Ireland and Denmark, and 71 overseas franchise stores.

The group, which ranks behind rival John Lewis in terms of annual sales, also posted a 4.2 percent increase in full-year pretax profit to 158.3 million pounds, against a forecast 157.5 million, driven by its breadth of products, appeal to a range of customers and multiple routes to market.

Yet the company did not see any general upturn in the sector, where Argos parent Home Retail for example has just posted an 18 percent drop in first-half underlying pretax profit and is closing stores.

“We’ve seen no significant change in consumer confidence in the last six to nine months and customers are acclimatising to what life is like in these challenging economic times,” said Chief Executive Michael Sharp.


Sharp expects the UK to be as competitive as last year in the run-up to Christmas, the main selling season for most retailers. He does not anticipate a significant improvement in the economic environment in 2013 but said he does expect Debenhams to make further progress.

ASOS posted an expected 40 percent rise in yearly profit as strong trading in overseas markets more than offset slower growth in the UK, and said it was positive on the outlook.

The retailer, which targets young women looking to emulate the designer looks of celebrities such as Nicole Scherzinger and Pixie Lott, made a proforma underlying pretax profit of 44.5 million pounds.

UK retail sales growth of 10 percent was dwarfed by international sales growth of 64 percent.

As well as the UK, the company has websites in the United States, Australia, Germany, France, Italy and Spain. “On a daily basis on the planet we are the most visited fashion website for 15 to 34 year olds,” CEO Nick Robertson told Reuters.

He said that by this time next year the group will have set up local language websites in both China and Russia.

“These are just two more markets which we will start small and gradually build,” he said.

Prior to Thursday’s update, ASOS shares had risen 90 percent so far this year, hitting a record 2,571 pence last week. But the stock was down 8 percent at 2,302p at 0951 GMT, after Robertson played down recent re-heated speculation of a possible bid from Amazon.Com Inc.

“What I can categorically say is I have haven’t spoken to (Amazon CEO) Jeff Bezos for three years,” he said. ($1 = 0.6239 British pounds)

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