Debenhams desperation

Shares dive as sales keep tumbling

STRUGGLING Debenhams is to slash spending on stores in the face of “exceptionally difficult” trading.

The high street giant is also considering selling bits of the business, including a chain in Denmark, to boost its finances.

The store yesterday issued a third profit alert in six months amid growing fears for its future.

Shares in Debenhams crashed 10%, to just 17.7p, yesterday as it revealed sales tumbled 1.7% in the past 15 weeks, worsened by embattled rival House of Fraser launching deep discounts.

Chief executive Sergio Bucher said an expected recovery in May didn’t happen and called the start to its sale “disappointing”.

He added: “These are exceptionally difficult times in retail. We can’t see conditions changing in the near future.”

The firm responded by preparing to cut investment from £140m to less than £90m, and ploughing ahead with £20m of cost savings. It is also kicking off a review of “non-core assets”, including its six-strong Magasin du Nord chain in Denmark. However, it will not come soon enough to stop annual profits this year falling to £40m at best – £10m less than last forecast. Bucher said it had seen a “rollercoaster” of sales, with bigger stores doing better than those in smaller towns.

Finance chief Matt Smith said the proposed closure of 31 House of Fraser branches would benefit Debenhams in 18 locations where it competed head to head.

Bucher insisted new womenswear ranges had been a big hit.

But Richard Hunter, head of markets at Interactive Investor, said: “The fear remains that the train has left the station.”

Analysts also warned that Debenhams could ditch its full-year dividend if trade doesn’t pick up.

■Stricken Poundworld has axed around 100 jobs from its head office as administrators struggle to find a buyer for the budget chain.

Nearly £300million was wiped off retailers’ share prices yesterday concerns of wider amid Next’s shares industry turmoil. Burberry dived fell 1.5%, while FTSE index of 3.7%. The retailers closed general down 16.12 points, or £287m.