Debenhams shares tumble after festive profits alert

No more store closures planned
No more store closures planned

Department store chain Debenhams has seen its shares slump by as much as 24% after warning over profits after it was forced to slash prices to boost flagging festive sales.

In a trading update brought forward from next week, the retailer said UK like-for-like sales tumbled 2.6% in the 17 weeks to December 30, with overall group sales down 1.8%.

It said “tactical promotional action” helped group sales improve over the six-week Christmas period, rising by 1.2% on a like-for-like basis, but it saw worse-than-expected trading in the first week of the post-Christmas sales.

Debenhams warned that “should the current competitive and volatile environment continue” into the second half, full-year profit before tax is likely to be in the range of £55 million to £65m.

Analysts had pencilled in annual profits of around £83m.

Shares in Debenhams slumped nearly a quarter at one stage before settling around 16% lower, sparking falls among retail rivals.

Marks & Spencer, which updates on its festive trading next week, dropped 2% in the FTSE 100, while Burberry and Next also fell 2%.

The profit alert comes just a day after Next in contrast upgraded its profit outlook after better-than-expected trading in its Directory and online arm.

Debenhams said it was ramping up cost savings, with around another £10 million earmarked for this financial year and £20m extra annually under a reorganisation being led by chief executive Sergio Bucher.

Bosses at the group insisted there were no more stores being earmarked for closure, but said the shop estate remains under review.