Department store owner Debenhams blamed its reduction in gross margin today partly on the impact of the integration of the nine Roches Stores purchased last year.
The group said today first-half UK like-for-like sales had fallen by 4.5 per cent and it expected the retail environment to remain challenging.
Debenhams, which traders say could be the target of private equity interest, said gross margins in the 26 weeks to March 3rd had fallen 0.4 per cent to 42.5 per cent as total sales rose 5.8 per cent.
Debenhams, Britain's leading department store group, said the reduction in gross margin was due to the impact of the integration of nine Roches stores and the shortfall in clothing sales following the unseasonably warm pre-Christmas trading period.
The group acquired the Roches stores at the end of last year and said it had a current pipeline of 29 new department stores and two new smaller format stores are due to open in the second half.
The company said seven of the nine Roches Stores had been converted to the Debenhams format and the other two would be completed in the next few months. It said trading at the stores was in line with expectations.