The Debenhams store is seen on Oxford Street, in central London
The Debenhams store is seen on Oxford Street, in central London.

Shares in Debenhams were up on the FTSE 250 in morning trading after the retailer reported a rise in pre-tax profit in the half year ended 26 February 2011.

Group like for like sales including VAT were flat during the period, while excluding VAT like for like sales dropped 1.5 per cent. The group's gross margin was up 20 basis points.

Profit before tax and exceptional rose 4.5 per cent in the period to £129.2 million, while net debt fell from £516.8 million to £351.6 million.

The group said that its Magasin du Nord business had seen like for like sales rise 9.3 per cent, while Debenhams Direct sales increased 82.4 per cent. The period also saw the opening of a new Debenhams store in Bath and the refitting of five stores.

Following the results Debenhams said it would be recommencing an interim dividend of 1.0 pence per share.

As well as announcing its results today Debenhams also said that its Chief Executive, Rob Templeman, will be retiring at the end of the financial year. He will be replaced by the Deputy Chief Executive, Michael Sharp, on 5 September 2011. Mr Templeman will remain as a consultant for Mr Sharp's first year as Chief Executive.

Mr Templeman, Chief Executive of Debenhams, said of today's results, "We are pleased with the performance of the business in the first half. The trading environment has been difficult but our focus on profit and cash generation has continued to deliver returns. Debenhams has now produced six consecutive halves of pre-tax profit growth in what has been a consistently challenging retail climate.

"Looking forward, there are some encouraging signs that commodity prices such as cotton may fall which could be positive for both consumers and retailers in terms of pricing. In the short-term, whilst we will continue to benefit from the contribution of Magasin and lower interest rates, we are planning for no real change in consumer confidence. We will continue to ensure that our focus on offering our customers outstanding choice, quality and value remains at the forefront of our decision making.

"We continue to believe that our investments in infrastructure, the building of a seamless multi-channel business and the continuing improvements to the store experience through our refurbishment programme will serve us well, particularly when the retail environment begins to improve."

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers, commented, "The group's debt-laden private equity past continues to be consigned to the history books, with the resumption of the dividend payment potentially marking a new chapter. A focus on profit margins as opposed to sales remains central to management strategy, while the willingness of its banks to refinance its previously stretched financial position has also played its part via reduced financing costs.

"On the downside, the change of management injects a degree of uncertainty, whilst outlook comments continue to underline caution. Nonetheless, with clear progress being made, market consensus opinion remains positive (buy) in tone, although down from the strong buy enjoyed at the full year October results."

By 09:30 shares in Debenhams were up 0.75 per cent on the FTSE 250 to 67.30 pence per share.