Three major British retailers, Debenhams, WH Smith and Dunelm, said they could successfully navigate a grim consumer environment by focusing on profit margins and pulling 'self-help levers'.
Cash-strapped UK shoppers are unwilling to spend, particularly on discretionary items, with a survey today showing consumer confidence recovered only slightly in March from the record low hit in the previous month. Consumers are worried about government job and welfare cuts, muted wage growth and the prospect of higher interest rates.
'It's right to be cautious about consumer confidence. But we are not recognising some of the comments that people are making about big sales falls,' said Rob Templeman, CEO of Debenhams. The firm posted a 4.5% rise in first-half profit and reinstated its dividend.
Several UK high street names, including electricals retailer Dixons, household goods group Home Retail and car parts to bicycles firm Halfords, have warned on profits in recent weeks.
Some, however, such as Marks & Spencer, and fashion firms ASOS and JD Sports, have shone through the gloom with positive updates.
Templeman, who will retire in September and be succeeded by the current deputy CEO Michael Sharp, said Debenhams would continue to benefit from raising the proportion of higher margin own-label products in its sales mix to offset the impact of higher input cost pressures.
The firm would invest in new store openings and re-fits, its supply chain, and grow its multi-channel offer and overseas.
Meanwhile, newspapers, books and stationery retailer WH Smith posted a 3% rise in first-half profit and hiked its dividend by 18%.
The firm is benefiting from CEO Kate Swann's strategy of cutting costs and improving gross margins by focusing on more profitable products, better sourcing and better control of markdowns, rather than driving top-line sales.
She has rebalanced WH Smith's mix of products towards core categories and away from entertainment products - CDs, DVDs, computer games and consoles. With an average transaction value of £5.50 sterling in its high street business and £3.50 at its travel outlets the firm is less affected when shoppers tighten their belts.
'We expect the economic environment to stay pretty tough but our plans reflect this and we've demonstrated in the past that it's no blocker to delivering a good performance,' Swann said.
Homewares retailer Dunelm said it was gaining market share even though underlying sales fell 1.3% in its third quarter.
