The good news for Debenhams investors is that the department store chain has already surprised on the upside – by not issuing a profit warning about Christmas trading.
That bad news had already happened by this point in the 2013 festive period – when its shares dived more than 12%, knocking £125m off the value of the group, following its warning that first-half profits had been hit by unprecedented high-street discounting in the runup to Christmas. But this time, everything has remained pleasantly peaceful.
All of which looks pretty promising as we approach the group’s trading statement this week, when the City will be focusing on profit margins, competitive pressures and – inevitably – the cost of living.
Inflation is falling and the economy growing, which may explain the decent recent run experienced by Debenhams shares – mirroring those of Home Retail Group, owner of Argos, which also reports this week. Investors have enjoyed around 30% gains in each stock over the past three months, and the City is expecting improved profits at both groups this year (4% for Debenhams and 9% for Home Retail Group, according to investment website Motley Fool). Barring more nasty surprises, of course.
