Investment: Debenhams stays bullish

THERE ARE only 58 shopping days left until Christmas and Debenhams' management will be holding their breath for every one. "Christmas is crucial" for this year's trading says chief executive Terry Green.

Unfortunately, the omens don't look good. Slowing sales growth took the gloss off what, otherwise, were impressive first results since Debenhams demerged from Burton in January. On a pro-forma basis, profits rose 16 per cent to pounds 138.6m on sales up 6.5 per cent at pounds 1.37bn.

Retailing, though, is all about current sales and on a like for like basis sales growth has slowed from 4.6 per cent in the second half of last year to "a little bit ahead" in the seven weeks of this year. Analysts interpret this as a 1 to 1.5 per cent rise. Even those estimates, however, could be too rosy. John Lewis's recent announcement of a sales decline of 5 per cent shows how difficult life is for retailers.

Debenhams remains sufficiently bullish to expand its store opening programme from 17 to 19 over the next five years. Management also gives a reassuring air of knowing where the company is heading - brands that you can only get in Debenhams, new designers and your own personal shopping assistant are all part of the strategy.

For all that, Debenhams remains predominately a clothes retailer, albeit one with low financial and operational gearing. Brokers' profits forecasts of about pounds 145m for the current year come with warnings about possible downgrades in future. In a rising market, the shares jumped 25p to 367p yesterday for a forward multiple of 14. Solid, but unless the consumer slowdown disappears, high enough.