Debenhams faces challenging start to 2008

Department store group Debenhams has posted a slight fall in six month sales after a "challenging" start to the year, and predicts tough times ahead. Like-for-like sales dropped 0.7% in the period to 1 March, after sales at the retailer had been flat for the first 18 weeks of the year. The firm, which has around 140 stores in the UK and Ireland, said it aims to control its stocks and cost base. High Street retailers have suffered as consumers rein in their spending.

Commenting on the first half sales, Rob Templeman, CEO of Debenhams, said: “Following a good performance over Christmas and the January sale, market conditions were tough through the remainder of January and February. Nevertheless, we are pleased with the response of customers to our new season’s ranges and to the improvements we have made in quality, design and value at all price levels, as evidenced by our market share gains. “The macro economic climate leads us to expect the retail environment to remain challenging and we are therefore focusing on driving sales, gaining market share and controlling our stocks and cost base."

Debenhams shares have fallen to less than a third of what they were in May 2006, when the firm listed, sparking a series of takeover rumours.

Dubai-based investor Milestone Resources is thought to be one potential suitor after it increased its holding in the struggling chain from 8.4% to 9.1% in January, according to the BBC.

Debenhams interim results will be released mid April.

Image: Debenhams Lingerie