Debenhams blames online rivals as profit fall hits shares

Steve Cook was appointed MD of Debenham's fashion and home team: Debenhams

The boss of Debenhams on Thursday criticised politicians for failing to tax online retailers as increased competition sent its profits and share price tumbling after another alert.

The struggling department stores chain’s boss Sergio Bucher said: “The Government’s responsibility is to make sure there is an even playing field and right now there is an unfair advantage to online pure-play competitors.”

He called for ministers to redress the balance. The retailer’s business rates bill is £80 million.

It posted an 85% slump in pre-tax profits to £13.5 million for the 26 weeks to March 3, having suffered from a disappointing Christmas and the so-called Beast from the East. Annual profits are expected to be at the lower end of the City’s forecasts, between £50 million and £61 million.

Same-store sales were down 2.2% after the freezing weather forced Debenhams to temporarily shut almost 100 stores.

The shares fell by 10% to 20.96p.

The retailer added that its chief financial officer, Matt Smith, is leaving to join upmarket rival Selfridges after three years with the business.

Smith, who has helped newish boss Bucher put together a strategy to turn the business around, insisted he was confident in the plan.

Bucher, who is speeding up turnaround plans, admitted “it hasn’t been an easy half” but said he was pleased by its push into digital, beauty and food, as well as its revamped stores.

“We are confident we can return Debenhams to profitable growth,” he added.

Debenhams, which has 241 stores, has a rent bill of over £200 million and is considering shutting up to 10 stores over five years.

The retailer will also cut 320 store management jobs to keep a lid on costs.