31st Dec 2013 10:45
LONDON (Alliance News) - British retailer Debenhams PLC Tuesday said that its first-half profit will be hit by heavy pricing promotions, and now expects a pretax profit for the first-half of the year to be significantly lower than last year at around GBP85 million.
The department store chain said that it expects conditions to remain highly competitive in 2014, and given current trading, said that it has decided to cease its buyback.
"The market was highly promotional in the run up to Christmas and we responded to these conditions to ensure our offer was competitive. However, this extremely difficult environment has inevitably had an impact on both our sales and profitability," said Chief Executive Officer Michael Sharp in a statement.
Ahead of an array of Christmas period trading updates next week, Debenhams said that it now expects a first-half pretax profit in the region of GBP85 million, down on last year's GBP114.7 million.
Debenhams said that in the 17 weeks to December 28, group like-for-like sales grew a mere 0.1%, against strong comparators from last year, and group gross transaction value rose only 0.7%.
The retailer said that online sales continues to power growth, increasing 27% during the 17 week period, and accounting for 15.6% of total sales.
Debenhams said that the better performing categories were beauty, home and gifting with clothing recording weaker results.
It said that gross margin declined in the 17 week period due to product category mix and higher markdown of its goods.
The group said that it did not experience an expected final surge in sales in the last week of the period, and now expects to need an additional markdown to clear stock in January and February. As a result, its expectation for gross margin for the first half is a decline of between 80 and 100 basis points.
Debenhams shares dropped 10.5% Tuesday morning, trading at 74.43 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright © 2013 Alliance News Limited. All Rights Reserved.
Related Shares:
Debenhams