Results round-up

In the 15 weeks to 17 June, LFL sales declined 0.9%, or 2.4% at constant currency, as the company highlighted a "more volatile" UK trading environment in the second half of the year. However, it said its targeted destination categories of beauty, accessories and food & drink have helped to mitigate the impact of a weaker clothing market. With 13 new food offers in the period, food sales have risen 5%.

Debenhams said it expects 2017 pre-tax profit to be within the range of market expectations, but if market volatility continues, the outcome could fall towards the lower end of the range.

Chief executive officer Sergio Bucher said: "We are making progress in implementing our exciting and ambitious new strategy, Debenhams Redesigned, which will make us the destination for social shopping. We have already started to deliver changes that will improve service for our customers and simplify and focus our operations.

"As industry data has confirmed, May was a tough month for retailers and we continue to see volatility in trading week to week. As a result we are focused on delivering cost control and self-help through our 'Fix the Basics' plan. We continue to build good foundations for longer term growth at Debenhams by becoming a destination, digital and different."

George Salmon, equity analyst at Hargreaves Lansdown, said: "After choosing to leave his position at the top of Amazon’s European fashion division to take over as CEO at Debenhams, we can assume Sergio Bucher likes a challenge. However, the task in front of him now looks all the more difficult.

"Recent figures from the ONS show sales volumes in the retail industry are growing at their lowest level for 4 years, and Debenhams is feeling the pinch. Trends in its key sales metrics have gone into reverse in recent weeks.

"The new CEO’s strategy, namely to improve the online offering, de-clutter the stores and step up the quality of the in-store service, seems sensible. However, Debenhams has struggled for years. Particularly in these difficult times, we feel investors should remember that it's one thing to correctly diagnose the problem and quite another to successfully apply the cure."

Carpetright reported a slump in full-year profit as it took a hit from the weaker pound and the revamp of its stores.

In the 52 weeks to 29 April, underlying pre-tax profit fell to £14.4m from £18.3m the year before, which the company said was in line with market expectations, while statutory pre-tax profit slumped to £900,000 from £12.8m.

Group revenue edged up to £457.6m from £456.8m, while year-end net debt stood at £9.8m, up significantly from £1.1m in 2016 due to the accelerated store refurbishment programme.

In the UK, LFL sales in the second half rose 1.8%, partially mitigating the 2.8% drop in the first half to give a full-year decline of 0.5% versus 2.8% growth

in 2016. Meanwhile, underlying operating profit fell to £10.7m from £17.8m, partly reflecting the pound's depreciation in the aftermath of the Brexit vote.

In Rest of Europe, LFL sales growth came in at 2.5%, marking a slowdown from the previous year's 4.8%, but underlying operating profit rose to £5.7m from £2.5m.

Chief executive Wilf Walsh said: "I am pleased to report on a year of significant strategic progress, as we implemented a wide-ranging programme of investment and operational change, to refresh and update the Carpetright brand. Our strategy is on track and the positive response we have received from these initiatives has encouraged us to press ahead with plans to complete the refurbishment of the UK store estate by the end of 2018 and to extend the programme in the Rest of Europe.

"We have made an encouraging start to the new financial year, underpinned by the improving performance of our refurbished UK estate. While a challenging consumer environment and competitive landscape remain headwinds, we are confident the additional potential in our self-help initiatives will support an increase in market share."

Shore Capital noted that headline underlying pre-tax profit of £14.4m was ahead of consensus expectations of £14.1m and its expectations of £14m. Revenue was also above Shore's estimate of £457m.

Neil Wilson, senior market analyst at ETX Capital, said: "Overall a decent enough second half has slightly offset a weak first half - LFL sales rose 1.8%, partially making up for the 2.8% decline in the first half. The question is whether this progress will be maintained.

"Investors are seeing this as a glass half full - shares leapt more than11% on the open. But doubts remain with the stock down a fifth since April. Carpetright has suffered a serious decline since last June as investors shy away from companies whose chief exposure is to UK consumers. Any turnaround has to be viewed in the context of a very tough market that might get tougher yet as inflation climbs and wages fail to keep pace."