Burberry Soars But Debenhams Struggles

Mixed results from the retail sector as sales for the high-end fashion brand and the John David Group report bullish trading

On a day that Tesco's results shone, other retailers reporting their numbers experienced mixed fortunes: John David Group and Burberry looked solid, while Debenhams once more ran aground.

Matthew Mceachran, retail analyst at Kaupthing, Singer & Friedlander, said both JD and Burberry delivered strong results as they have managed to differentiate themselves from their competitors.

"The management team at JD is doing a super job, and have delivered strong sales growth, albeit from a low base. Burberry also looks strong and it is at an end of the market which is more protected from the market volatility," he said.

Mr Mceachran said that Debenhams is at an early stage of its recover programme in a much more competitive market place. "JD and Burberry have differentiated themselves from rivals. Debenhams faces stronger challenges but there are signs it could do the same," he added.

John David, which owns sports clothing retailer JD Sports, announced yesterday it had shaken off the problems at its retail rivals to double profits for the year to £35m. Peter Cowgill, the group's executive chairman, said JD had boosted profits through "strong buying, merchandising and own brand performance".

Yet the shares closed 1.7 per cent down at 346p, as investors blanched at the board's cautious outlook for the coming year. Mr Cowgill said the recent strong performance in sales and gross margins meant further improvement in those areas was challenging. "Furthermore, despite recent and current performance, the current economic climate and outlook dictates a note of prudence," he added.

The high end fashion label Burberry Group reported bullish trading during the six months to the end of March. The luxury brand group reported that its total revenue from retail operations had grown 18 per cent to £546m from £458m a year earlier.

Its chief executive, Angela Ahrendts, said Burberry had enjoyed a good end to the year "against the background of an increasingly challenging external environment". The figures sent the shares soaring to close 10.73 per cent higher at 438.5p in London yesterday.

The news wasn't so bright for Debenhams, which revealed that pre-tax profits had fallen from £105.5m in the first half of 2007 to £92m this year, a drop of 12.8 per cent.

Philip Dorgan, analyst for Panmure Gordon, said the market was overly critical as investors sold off shares in the wake of the announcement. He added that despite the fall, the pre-tax profits had beaten the £91m forecast. "We have regard for the management team and think that the shares reflect the gloomy short-term scenario, but not a return to profit growth," he said.

Debenhams chief executive, Rob Templeman, expects trading to remain challenging "so we will continue to focus on the areas of our business that are within our control".

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