Debenhams to increase third-party shops-within-shops

Debenhams is poised to step up the number of third-party shops-within-shops in its department stores, as it seeks to revive sales and profits amid pressure from some big investors for an improvement.

Michael Sharp, chief executive, said that the retailer would expand the trials with Sports Direct, Monsoon and Costa Coffee and add a roster of new third-party clothing and food and brands to fill a surfeit of space in its stores.

The department store chain currently has Sports Direct concessions in four stores, and this will double by August. It will double again next year, taking the number of Sports Direct concessions to 16 by August 2016, equivalent to 200,000 square feet, or 20 per cent of Debenhams' excess space.

"I have absolutely no problems with it at all," said Mr Sharp of the relationship with Sports Direct. "It is a good partner for Debenhams."

As well as expanding the Sports Direct link-up, trials with Costa and Monsoon will also double, to 20 and 10 outlets, respectively, in Debenhams stores.

The department store chain will also add some new concessions, including Only, a Danish women's fashion brand, and Jack & Jones, the Danish menswear brand, which will have 25 and 15 concessions, respectively, by September.

Mr Sharp said that Debenhams was currently utilising 20 per cent of the 1m sq ft of excess space it had identified, and this would increase to 30 per cent by Christmas, and 50 per cent by this time next year.

The comments came as Debenhams reported pre-tax profit that beat market expectations.

Profit before tax rose from £85.2m to to £88.9m, in the six months to the end of February, the company said. There was a £3m benefit from bringing Debenhams' new season spectacular promotion into the first half, to align it with the time when most customers were being paid.

Debenhams also said that gross transaction values had risen 2.3 per cent to £1.6bn, while sales from stores open at least a year rose 1.3 per cent in the half year.

Mr Sharp said on Thursday that he believed that Debenhams was making progress, succeeding in increasing sales while reining in its promotions, which had become too numerous.

Some big shareholders have demanded that the company improve performance and rethink its strategy. Mr Sharp has been a focus for these concerns.

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Debenhams also said on Thursday that it had made progress with its online service - an area of concern for some shareholders - including next-day click-and-collect, and a 10pm cut-off for next-day delivery to home.

Online sales rose 12.7 per cent in the first half.

Debenhams said that there were some green shoots in terms of consumer confidence, but shoppers had not completely shrugged off concerns about the economy.

"Our customers are telling us that they are very aware of the positive economic indicators," Mr Sharp said. "They can see what is happening on inflation, which is good from their point of view."

But he added: "They are cautious because there is so much uncertainly out there, the election . . . troubles around the world."

Debenhams shares closed up 6.6 per cent to 84.90p in London.

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