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Debenhams ekes out minimal growth, quiet on future plans

By Sarah Young

LONDON (Reuters) - Debenhams (DEB.L), Britain's second-largest department store group, achieved minimal growth in a tough clothing market and said a plan to focus more on beauty, gifts and food products meant it was well-placed for the year ahead.

But with Chief Executive Sergio Bucher just weeks into his new role, the 240-strong store chain said it would not be providing any further information on its longer-term plans until next Spring.

Britain's clothing market is shrinking, with retailers including Next (NXT.L) and Marks & Spencer (MKS.L) also struggling to increase sales. Data from market research body Kantar Worldpanel showed the UK fashion market suffered its steepest decline since 2009 for the 12 months ended in September.

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Debenhams, which is second to No.1 department store chain John Lewis [JLP.UL] by revenue, reported underlying pretax profit for the year ended Sept. 3 of 114.1 million pounds, up 0.5 percent on last year and in line with forecasts.

Analysts, who expect profit to slide to 108 million pounds in the new financial year, are keen to hear what former Amazon (AMZN.O) fashion executive Bucher, appointed for his e-commerce and international skills, is planning for Debenhams.

"It is business as usual – a weak business model being run defensively in a difficult market," said Haitong analyst Tony Shiret. "We shall have to wait to see whether Mr Bucher can break Debenhams out of this long-term decline."

Shares in Debenhams gained 1.8 percent to 54.8 pence by 0858 GMT, which analysts said reflected some relief that the company was performing in line with expectations and that its pension deficit had not worsened by as much as some recent forecasts.

The stock has lost a third of its value over the last six months, underperforming a 3 percent rise in Britain's mid-cap share index (.FTMC), due to concerns over the weak clothing market and the impact on consumer appetite from Britain's June vote to leave the European Union.

Debenhams trading director Suzanne Harlow said poor demand for clothing was the biggest issue over the six months to September 2016.

"It's not really to do with Brexit conditions, it's more to do with the underlying performance of clothing through the second half," Harlow told reporters on Thursday.

In the future, Debenhams will be affected by the Brexit vote-induced devaluation of the pound as the company buys clothing and other goods in dollars, said CFO Matt Smith, but that wouldn't take effect until Spring 2018 as the retailer is fully-hedged for the current year.

(Reporting by Sarah Young; editing by Paul Sandle and Tom Pfeiffer)