Debenhams profits plunge nearly 85% as sales flag
Debenhams saw its half-year profits plunge nearly 85% after extreme weather brought in by the Beast from the East gouged earnings.
The retailer said its bottom-line pre-tax profits fell from £87.8 million to just £13.5m over the 26 weeks to March 3, having taken a major hit during the final days of the trading period when bad weather forced Debenhams to temporarily close around 100 stores.
On an underlying basis - having been stripped of £28.7 million in exceptional costs linked to its strategic review and restructuring - pre-tax profits slumped 51.9% to £42.2m.
That was below analysts’ forecasts, which had placed pre-tax profits at around £44m.
Debenhams also blamed a “disappointing Christmas season” for increasing competitor discounting and ultimately hitting underlying earnings for the UK, which fell 39.3% over the half-year.
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Like-for-like sales dropped 2.2%, with the retailer citing a “challenging UK market background”.
Tough Christmas trading prompted a January profit warning that saw shares fall 20%. It is now forecasting full-year pre-tax profits at the lower end of the current range of forecasts of between £50m to £61m.
CEO Sergio Bucher said: “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.”
“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.”