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.