Debenhams upbeat as cotton costs start to fall

DEPARTMENT store Debenhams offered some cheer for shoppers as itsignalled the recent surge in cotton prices may have peaked.

The chain is hopeful that prices for commodities such as cotton,which have rocketed in the past year, could fall back in a move thatwould ease some of the pressure on consumers and the margins ofretailers such as Debenhams.

The chain added that its underlying profits increased 4.5% toPounds 129.2m in the 26 weeks to February 26, despite flat same-store sales as it concentrated on higher-margin private label anddesigner brands.

It gave no indication about its current trading performance butunderlined its improved prospects by reporting its first dividendsince 2008.

Numerous retailers including HMV, Mothercare and Currys and PCWorld-parent Dixons Retail have warned on profits as they havestruggled to pass on rising prices to cautious shoppers.

This week it emerged that the official rate of inflation droppedto 4% in March from 4.4% the previous month as retailers put on morediscounts.

Debenhams, which has 167 stores in the UK and Ireland, said itwas encouraged by strong sales from ranges from designers such asJonathan Saunders, Preen, and Jasper Conran. It claimed to havegrown its share of the womenswear, childrenswear, cosmetics andperfume markets.

Sales through its internet arm Debenhams Direct rose 82%. Bestsellers included Egyptian cotton towels, Christian Lacroix perfume,Thorntons chocolates, and remote-control helicopters.