Debenhams warns on profits again
Debenhams has again warned that profits will be lower than expected: its third warning this year.
The department store chain said sales in May and early June had been below expectations and it expected pre-tax profits of £35m-£40m, compared with the £50m expected.
In January it had warned that Christmas trading had been disappointing and in April it said February’s storms would cut profits.
Like for like sales in the 15 weeks to 16 June were 1.7% lower and down 2.1% in the 41 week period.
‘Against a background of increased competitor discounting and weakness in key markets, trading in May and early June has been below plan despite weak comparatives.’ It said.
It said it expected to end the financial year with debts of £320m, leaving it with £200m of banking facilities. It said it would cut capital expenditure and expected debts to be lower in 2019.
‘It is well-documented that these are exceptionally difficult times in UK retail, and our trading performance in this quarter reflects that. We don't see these conditions changing in the near future and, because it is our priority to maintain a robust balance sheet, we are making very careful choices about how we deploy capital. We see clear evidence of progress as our digital growth outperforms the market and customers respond positively to our product improvements and format trials. We have also put in place a leaner operational structure and made a number of important hires so that we are well-equipped to navigate the market turbulence,’ said Sergio Bucher, Debenhams ceo.