Poor sales sparks Debenhams profit warning
Department store group Debenhams issued a profits warning today after its sales woes continued into the spring season.
The British chain, which has 132 stores including several outlets in Ireland, reported pre-tax profits of £105.5m (€155m) for the six months to March 3, but said it did not expect to meet market expectations in terms of the full year's profits performance.
It blamed challenging trading conditions and said like-for-like sales were 6.9% lower in past six weeks, adding that it was braced for a negative sales performance over the rest of this financial year.
Debenhams said it hoped better in-store service and more contemporary presentation would drive an improvement later in the calendar year.
Today's profits blow comes just a month after Debenhams said its spring and summer ranges had received a positive reception from customers.
Debenhams has an own-brand portfolio including labels such as Debut, Maine New England and Thomas Nash, plus 25 Designers At Debenhams brands offering product lines from the likes of Jasper Conran and Julien Macdonald. It achieves around 60% of its sales from clothing.
Announcing half-year results today, Debenhams said like-for-like sales were down 4.5% over the six months to March 3.
It said the weaker-than-expected figure was caused by under-performance in menswear and disappointing sales from its knitwear and outerwear ranges.
The impact of new openings, including seven of its smaller Desire format stores, meant total sales were ahead 5.8% at £1.28bn (€1.88bn).
Debenhams returned to the stock market in May after a lucrative flotation for its private equity owners and managers.
Since then, its performance has disappointed investors, with shares down by more than 10% prior to the profits warning today. Shares were off another 9% to 157.5p today.
The company stuck by its store opening programme today and said it would look to target some of the larger retail destinations where it is not currently represented, such as Liverpool, Newcastle and Bath.
It said today: "Although Debenhams has a retail heritage of more than 100 years, we only have 132 department stores across the UK and Ireland. We remain under-represented in many large cities and towns across the country which presents us with significant expansion opportunities."
