Retail stocks rattled after Debs updates

Market report Scott Reid

Debenhams cast a shadow over the retail sector as it issued its third profit alert for 2018, saying market weakness and competitor discounting had knocked sales.

The department store chain suffered a 1.7 per cent fall in like-for-like sales over the 15 weeks to 16 June and said trading was “below plan” in May and early June despite weak comparatives from a year earlier.

Full-year pre-tax profits are now set to come in between £35 million and £40m, down from previous estimates of £50.3m. Shares closed down 10.7 per cent at 17.5p after an even heavier opening slide.

Meanwhile, Footasylum, the sportswear and trainers retailer targeting the on-trend 16 to 24-year-old consumer, saw its stock market value tumble after warning over annual earnings and revealing a recent sales slowdown. Shares in the recently-floated group slid 52 per cent to 80p after it said plans to ramp up investment in its stores and website was set to see more “modest” underlying earnings growth in the new financial year.

Elsewhere, retirement housebuilder Mccarthy & Stone saw shares slide 17 per cent to 108.2p after it warned over full-year earnings and said its boss will leave in August.

Mike van Dulken, head of research at Accendo Markets, said: “Another bad day for UK retail and housebuilders, with profits warnings from Debenhams and Footasylum hurting for the former and Mccarthy & Stone doing the same for the latter.”

The benchmark FTSE 100 index ended the day down 27.48 points at 7,603.85. The outsourcer rose on news of winning a government contract and the sale of Supplier Assessment Services for £160 million in cash. Retail chain Footasylum has warned over a more “modest” growth in earnings amid plans to invest in its stores and online offering.