Home / Articles / Debenhams shares dive 20% on profit warning

Debenhams shares dive 20% on profit warning

Debenhams has issued a profit warning and refused to rule out job losses after a weak festive season – its shares falling over 20% in response.

In a trading statement that was brought forward from next week, the retailer said it had been forced to slash prices to boost flagging sales – describing business as “highly competitive and volatile”.

The department store chain said like for like sales in the 17 weeks to 30 December in its core UK market fell 2.6% overall.
“We took tactical promotional action to improve our performance which resulted in a stronger 6 week Christmas period against tough comparatives, with like for like sales up 1.2% in constant currency and digital growth of 15.1%,” the statement said.

Image: M&S shares fell too after Debenhams released its unscheduled trading update
It added: “However, the first week of post-Christmas Sale was below expectations despite further markdown investment, particularly in the highly seasonal Gift category.”
As a result, the group said it now expected full year profit before tax to fall in the range of £55m to £65m. The City had been expecting a figure around £83m.
It said an acceleration in cost-cutting – with a further £10m in savings identified – was cushioning reduced profitability.
Sources told Sky News that while the company had not yet announced any job losses as part of the new savings drive, they could not be ruled out.

It had previously put 10 stores under review.
The update from Debenhams suggested it was likely to be another mixed Christmas for the retail sector after Next defied its own forecasts of a weaker festive season to post a surprise increase in sales.
While Debenhams shares plunged 21% in early Thursday trading, rivals also felt market value pain with M&S losing 2% and Next also among the fallers.
Debenhams chief executive, Sergio Bucher, said: “The market has been challenging and particularly promotional in some of our key seasonal categories and we have responded in order to remain competitive for our customers, which has impacted our profit performance.

More from Business

“Nevertheless, we are seeing positive early signs from the changes we have made as part of our Debenhams Redesigned strategy.
“The market dynamics we have seen have reinforced our view that we need to move even faster to implement the cultural and organisational changes needed to ensure Debenhams is in the best possible shape for today’s fast-changing retail environment.”

Source: Sky

About Business Ideas UK

My name is Joel Bissitt. I have been an entrepreneur for 24 years and have run many small businesses across various sectors. For the last 10 years I have worked mainly within online media, franchising and small business start-ups.

Check Also

Another 40 Poundworld stores to close

Forty more Poundworld stores are to close later this month, leading to the loss …

Free Franchise Guide
close slider

Free Franchise Guide

Interested in buying a franchise? The our FREE Franchise Guide is a must! The guide contains lots of information to help you decide if franchising is right for you.

Yes, I'd like to join the Franchise UK mailing list.