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Debenhams profits crash after poor Christmas and Beast from the East

Debenhams said like-for-like sales dropped 2.2pc 'against a challenging UK market background' - REUTERS
Debenhams said like-for-like sales dropped 2.2pc 'against a challenging UK market background' - REUTERS

Department store chain Debenhams has seen profits crash by 85pc and warned over its outlook after bitter weather conditions from the ‘Beast from the East’ took a bite out of sales.

The troubled retailer saw half-year pre-tax profits plunge 84.6pc to £13.5m, with the UK’s recent cold snap forcing it to temporarily shut 100 stores during the final week of trading.

The short-term closures shaved around 1pc off like-for-like sales, which dropped by 2.2pc for the 26 weeks to March 3 in response to a lacklustre festive performance and tough trading on the high street.

The group said it had been confronted by a “volatile and highly competitive market”, with UK store sales sinking 4.1pc over the period.

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Investors sent Debenhams shares down more than 5pc on the London Stock Exchange, as it cautioned that annual pre-tax profits would now hit the lower end of market forecasts of between £50m and £61m.

Debenhams' woes add to the gloom engulfing the British high street, with a clutch of retailers embarking on refinancing and restructuring drives to counter a string of cost pressures, such as rising staff wages and higher inflation.

Chief executive Sergio Bucher said: “We expect no help from the external environment, so we are focused on delivering our Debenhams Redesigned strategy, aiming to mitigate difficult trading conditions through self‐help initiatives.

“It has not been an easy first half and the extreme weather in the final week of the half had a material impact on our results.

“But I am hugely encouraged by the progress we are making to transform Debenhams for our customers.”

High street recession
High street recession

Group statutory revenues were down 2.4pc to £1.31bn for the six-month period, as some areas of the business were confronted by fierce discounting from rivals and weaker consumer spending.

However, the group chalked up 9.7pc sales growth online, as more shoppers snapped up products using their mobile phones.  

Mr Bucher, who joined from Amazon Fashion last year, has taken steps to overhaul the retailer, announcing plans in February to slash 320 store management jobs to help cut costs.

The half-year update came as Debenhams revealed that its chief financial officer Matt Smith had been poached for the finance director role at Selfridges.

Debenhams has started the hunt for his successor.