CHALLENGES

Department store chain Debenhams saw its half-year profits plunge nearly 85 per cent after extreme weather brought in by the Beast from the East gouged earnings, but claimed yesterday that it was “holding share” in a challenging fashion market.

The retailer said its bottom-line pre-tax profits fell from £87.8 million to just £13.5m over the 26 weeks to 3 March, having taken a major hit during the final days of the trading period when bad weather forced it to temporarily close about 100 stores.

On an underlying basis – having been stripped of £28.7m in exceptional costs linked to its strategic review and restructuring – pre-tax profits slumped 51.9 per cent to £42.2m. That was just below analysts’ forecasts, which had placed pre-tax profits at around £44m.

Debenhams also blamed a “disappointing Christmas season” for increasing competitor discounting and ultimately hitting underlying earnings for the UK, which fell 39.3 per cent over the half-year.

0 The retailer, like many of its peers, is facing severe structural pressures

SERGIO BUCHER, CEO

Like-for-like sales, meanwhile, dropped 2.2 per cent, with the group citing a “challenging UK market background”.difficult trading over Christmas prompted a profit warning by the retailer in January, sending shares down 20 per cent. It is now forecasting full-year pre-tax profits at the lower end of the current range of forecasts of between £50m to £61m.

Chief executive Sergio Bucher said: “It has not been an easy first half and the extreme weather in the final week of the half had a material impact on our results. But I am hugely encouraged by the progress we are making to transform Debenhams for our customers.

“We are holding share in a difficult fashion market, and, in other categories such as furniture, exciting new partnerships have the potential to transform our offer.

“We approach the remainder of the year mindful of the very challenging market conditions, but with confidence that we have a strong team

“It has not been an easy first half and the extreme weather in the final week of the half had a material impact on our results.”