Debenhams sets out its stall

DEPARTMENT stores group Debenhams made its case for a high asking price from would-be buyers, showing that sales growth is accelerating in its stores.

The group also confirmed that venture capital groups, CVC Capital and Texas Pacific, were behind an approach last month that followed a £1.5bn indicative offer from Permira in May.

Permira, best known for making a huge profit on the sale of DIY chain Homebase earlier this year, is expected to kick-start the bidding war by tabling a formal 425p-a-share offer within the week. Debenhams refused to be drawn on the takeover battle. The shares rose 4p to 421p in early trade.

The company lifted like-for-like sales by 3.8% in the 20 weeks to 19 July - the higher end of City forecasts. Like-for-like growth was around 5% in the second 10-week period as shoppers snapped up summer fashions. The gross margin improved by 0.6% over the 20 weeks.

'Debenhams continues to trade well and in line with our expectations,' said chief executive Belinda Earl. 'We are benefiting from ongoing investment and the brand. Our womenswear business is an improving trend with young fashion brands showing strong sales growth.'

Earl and finance director Matthew Roberts are working with the retailers' suitors, fuelling concerns about possible conflicts of interest.