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21 October 2011 | Adam Leach
Department store chain Debenhams is looking to retain flexibility in its
supply chain as much as possible, its new CEO has said.
The high street retailer reported
a rise in pre-tax profits in its full year results, published yesterday, to
£160 million compared with £140 million last year. However, due to the uncertain
future of retail and the wider economic climate, the company’s new chief is looking
to ensure as much flexibility in its sourcing as possible.
CEO Michael Sharp said: “It is
right to remain cautious about the strength of consumer confidence over the
next 12 months given the uncertain economic outlook. We will therefore continue
to run the business with tight management of costs and stocks, retaining as
much flexibility as possible in the supply chain to enable us to deal with
whatever the market presents.”
The company’s annual report
revealed that, despite the rise in pre-tax profits, increasing commodity
prices, particularly cotton, placed added pressure on the supply chain. It
said: “There was significant pressure in the supply chain during 2011 as our
buying teams faced substantial increases in commodity prices. The most
significant was for cotton. The NationalCotton Council of America’s A Index
reports that the average price has risen to 175.2 cents per pound in 2011
compared with just 62.75 cents per pound in 2010.”
In response the company took
action to try to mitigate the effects, including adapting its product range,
changing packaging size and sourcing products from low cost countries.
Yesterday also saw the release of the latest retail sales data from the
Office for National Statistics. Despite recording a rise of 0.6 per cent for
September, analysts had forecast no change, the figures for summer spend were
revised down. Chris Williamson, chief economist, Markit, said: “We are seeing an
even weaker trend in spending than previously thought. On a three-month on
three-month basis, sales were down 0.2 per cent in September.”
