Source: Company reports/FGRT

FY17 Results

UK-based department store chain Debenhams reported FY17 statutory revenues of £2,335 million, up 1.1% year over year. UK reported revenues decreased by 0.7% and international revenues increased by 9.5% year over year. Beauty category sales increased by 5.0% and food sales by 8.0% year over year, while clothing sales declined by 0.5%. Group comparable-store sales decreased by 0.2% year over year on a constant-currency basis. Comparable-store sales were mainly driven by 12.7% online sales growth. UK store comparable sales were flat. The FY17 gross margin contracted by 50 bps to 12.4%. The operating margin contracted 100 bps to 4.6% and underlying EPS of 6.4p declined by 14.7% year over year in FY17.

Outlook

For FY18, Debenhams forecasts gross margin erosion of 25 bps year over year and an increase in total costs of 1.0%–2.0% year over year. Management did not issue sales guidance. The consensus estimate for gross transaction value sales for FY18 stands at £2,940 million, implying an annual year-over-year decline of 0.3%. Consensus expects operating profit of £100 million, implying a year-over-year decline of 9.2%. For FY18, consensus expects EPS of 5.4p, implying a decline of 15.0% year over year.