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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 31​​ October​​​, 2016​​​​​​​​​​​​​​​​​​​​​

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Debenhams sales solid, as headwinds persist

Debenhams reported positive sales in the 53 weeks to September 3, as LFLs rose 0.7%, with revenue flat at £2.3bn. Debenhams’ pre-tax profits dropped 7%, however on an underlying basis rose 0.5% to £118.2m. As part of a new strategy to diversify, the department store chain plans to shift away from a weak clothing market, where sales dropped to 48% of its income, towards beauty, gifts and food. Debenhams has partnered with restaurant chains such as Franco Manca for new in-house restaurants, for instance, as it looks to make better use of its shop space.​

Overall, the UK Retail market remains uncertain and headwinds persist. The continued weakening of the value of the pound is fuelling inflationary pressures, and optimism about the wider UK economy is reflected in wavering consumer confidence, which dipped to -3 in October, according to GFK’s measure. Although this is down from September’s level, it remains well above expectations post the EU referendum. UK retail footfall also continued to decline in September, down 0.9% YoY, and 0.4% on a three-month basis. High street and shopping centre footfall both fell below their three-month average, while footfall in retail parks was broadly flat.​

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