Debenhams posts slump in half year profit
Debenhams has seen its first half pre-tax profit decline by 84.6% to £13.5 million after freezing weather led to the temporary closure of almost 100 of its stores in the final week of the period.
In the six months to 3 March UK like-for-like sales declined by 2.2%. Meanwhile, underlying pre-tax profit was down 51.9% to £42.2 million.
The retailer said it had not been an easy first half and that the weather related problems in the last week of the period had reduced like-for-like sales in the half year by an estimated 1%.
Sergio Bucher, Debenhams chief executive, said: "The UK retail environment is undergoing profound change, and with the help of some important new senior hires, we are moving faster and working harder than ever to ensure Debenhams is well-placed to outperform in this new retail world. 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.”
Debenhams said a disappointing Christmas, which saw an increase in competitor discounting, led to a decline its gross margin rate. This impacted UK EBITDA which fell by 39.3% although international EBITDA was up 2.6% in the period.
Based on its current view of the second half of the financial year, the retailer now expects its full year pre-tax profit to be at the lower end of market expectations at between £50 million and £61 million.
Bucher added: “We approach the remainder of the year mindful of the very challenging market conditions, but with confidence that we have a strong team and the right plan to navigate them and return Debenhams to profitable growth."
In a separate announcement, Debenhams has reported that its chief financial officer Matt Smith is to leave the business to join Selfridges.
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