Jun 19, 2018

Debenhams issues third profit warning of 2018

Shares in Debenhams fell by almost a fifth after the struggling British department store group issued its third profit warning of 2018, adding to the deep sense of gloom on UK high streets. Blaming "a background of increased competitor discounting and weakness in key markets", Debenhams said that its full-year pre-tax profits would be between £35m and £40m. Analysts had expected the retailer to make £50.3m. "It is well-documented that these are exceptionally difficult times in UK retail, and our trading performance in this quarter reflects that," Debenhams chief executive Sergio Bucher said. Mr Bucher, who joined Debenhams from Amazon, is more than halfway through a three-year programme to cut costs and increase sales in food and beauty products, reducing Debenhams' reliance on big discounts. Chief financial officer Matt Smith said on a call with analysts that these would likely include Danish department store chain Magasin du Nord, which Debenhams purchased in 2009 as its first step into mainland Europe. After raising its stake in March, Sports Direct said it wanted to strike strategic partnerships with Debenhams such as combining both retailers' online operations and working together internationally.

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