Debenhams delights despite heat

BID-TARGET Debenhams today reassured the City that its sales have held up well despite the sweltering summer temperatures.

In an unscheduled year-end trading statement, chief executive Belinda Earl said Debenhams has traded 'in line with our expectations' since it last updated the market in July.

She added: 'The business is benefiting from our continuing investment in the Debenhams brand and our stores, along with an improving performance in womenswear.'

For the 26 weeks to 30 August, total sales were ahead by 7.7%, with like-for-like sales up by 3.8% while for the full year to 30 August the figures were 6.7% overall and 3.7% excluding new space. Margins rose by 0.7% in the second half and by 0.4% for the full year.

Although the group saw customers stay away in favour of the beach or barbecues, it benefited from its geographical spread of stores throughout the country. Womenswear enjoyed a boost as the heat wave dragged on, encouraging women to top up their summer wardrobes. Most affected by the weather were homewares and the in-store restaurants.

The 'steady-as-she-goes' statement could increase the pressure on private equity firm Permira to up its 425p-a-share bid terms, which value the group at £1.5bn. Although these have been agreed by the Debenhams board, some shareholders have complained they are too low.

Rival private equity firms CVC and Texas Pacific are still considering a counter offer but have until the end of the month to make a move. Last week's first closing deadline for the Permira bid saw holders of only 2.22% accept the terms, with most investors holding on in the hopes of a rival offer.

Debenhams' shares were up 3p to 434p, valuing the group at £1.57bn.

Meanwhile, classic clothing retailer Austin Reed tomorrow relaunches its flagship store in London's Regent Street after a lengthy £12m-plus refurbishment of the 1926 Grade Two listed building.

Chief executive Roger Jennings, who has rebuffed several bid approaches in recent months, said that the revamp 'reflects our confidence in the future prospects for growth for the group in the UK and internationally'.

Retail space at the store is increased by 15% and it now includes high-speed glass lifts, a central atrium, bar and cafe and a beauty salon and barbers.

Weather is the sales key

THE weather has dominated the High Street over the past few months. The hottest June for 27 years saw people flock to the shops to stock up on summer clothes, outdoor tableware and barbecues, giving retail sales their biggest boost since November 2001.

The spending spree continued in July, until August's heatwave triggered a dramatic plunge in High Street activity as millions headed for parks and beaches instead of the shops and stores.

Clothing sales were worst hit with customers reluctant to try on autumn ranges. But a slide in the thermometer has seen spending pick up again, and analysts FootFall report 10.7% more visitors to shopping centres on bank holiday Monday than a year ago.