Sept. 17 (Bloomberg) -- Debenhams Plc shares rose 1.7 percent after the U.K.’s second-largest department-store chain reported increased sales and a jump in online revenue.
Revenue at stores open at least a year climbed 1.9 percent in the 10 weeks to the end of the fiscal year on Aug. 31, the London-based company said in a statement today. That compared with unchanged sales in the previous 16 weeks. Online revenue advanced 46 percent for the year, taking Debenhams’ share of this market to 3.7 percent.
Chief Executive Officer Michael Sharp is expanding Web offerings and modernizing shops to lure shoppers. The 12 stores that were modernized in the year are performing well and the transformation of the flagship Oxford Street site in London is on time and on budget, according to the statement.
“Robust trading over the last quarter should go some way to reassuring investors that the Debenhams proposition continues to appeal to customers,” Eithne O’Leary, an analyst at Oriel Securities Ltd. who has a buy recommendation on the stock, said in a note to clients. “This is a business that has a clear strategy for product, stores, online and international growth.” O’Leary has a 150 pence price target for the shares.
The stock advanced 1.8 pence to 105 pence in London. The volume of shares traded was more than twice the three-month daily average.
The gross margin is set to be unchanged for the full year, after a fall of 20 basis points in the first half, compared with the previous year, Debenhams said. One basis point is 0.01 percentage point. Full-year pretax profit will be in line with analysts’ estimates, it said.
Full-year sales at stores open at least a year climbed 2 percent.
“The shares continue to trade on a notable sector discount,” Peel Hunt analyst John Stevenson said in a note to clients. Until profit margins “start to build, this is likely to persist in the short term.”
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