Debenhams group issues a profits warning following flagging festive trading

DEPARTMENT STORE chain Debenhams has issued a profits warning after it was forced to slash prices to boost flagging festive sales.

In a trading update brought forward from next week, the retailer said UK like-for-like sales tumbled 2.6 per cent in the 17 weeks to December 30, with overall group sales down 1.8 per cent.

It said “tactical promotional action” helped group sales improve over the six-week Christmas period, rising by 1.2 per cent on a like-for-like basis, but it saw worse-than-expected trading in the first week of the post-Christmas sales.

Debenhams warned that “should the current competitive and volatile environment continue” into the second half, full-year profit before tax is likely to be in the range of £55m to £65m.

Analysts had pencilled in annual profits of around £83m.

The profit alert comes just a day after Next in contrast upgraded its profit outlook after better-than-expected trading in its Directory and online arm.

Debenhams said it was ramping up cost savings, with about another £10m earmarked for this financial year and £20m extra annually under a reorganisation by chief executive Sergio Bucher.

The group insisted there were no more stores being earmarked for closure, but said the shop estate remains under review.

Debenhams plans to close 11 warehouses and put up to ten stores under review.