Debenhams has cautioned that full-year profits could be “towards the lower end” of market expectations as it grapples with turbulent trading conditions.

The department store group said pre-tax profit could be hit if “current market volatility” continues following an “unpredictable” Easter period.

Debenhams issued the warning as it suffered a 0.9% drop in group like-for-like sales during its third quarter.

In constant currency, like-for-likes fell at the steeper rate of 2.4% in the 15 weeks to June 17.

Debenhams said its gross transaction values also fell 1% during the quarter, but online sales jumped 7.9%.

Across the wider year-to-date period, Debenhams said its like-for-likes were up 1.8%, but down 0.7% on a constant currency basis.

Gross group transaction values climbed 1.7% in the 41-week period, while online sales spiked 12.6% during the same timeframe.

Mixed fortunes

Debenhams, which launched its Debenhams Redesigned strategy under new boss Sergio Bucher in April, said the UK trading environment had been “more volatile” during the second half of the year.

But the retailer said the performance of its “targeted destination categories” of beauty, accessories, and food and drink had helped offset the impact of a “weaker” clothing market.

Despite tough trading conditions, Debenhams hailed 1.7% growth in full-price sales and a 47% spike in m-commerce during the quarter.

The department store business said it was making “good progress” with its new strategy, which aims to “fix the basics” and drive growth through “social shopping” – making it a leisure activity centred around mobile interaction with customers.

Debenhams has already ushered in a new training programme to support up to 2,000 staff who are switching to customer-facing roles, and transitioned to a single warehouse management system.

Crucially, it has also slashed replenishment times from eight days to two by implementing direct-to-floor deliveries.

Bucher, who joined Debenhams from Amazon in October, said: “We have already started to deliver changes that will improve service for our customers and simplify and focus our operations.

“As industry data has confirmed, May was a tough month for retailers and we continue to see volatility in trading week to week. As a result we are focused on delivering cost control and self‐help through our ‘Fix the Basics’ plan.

“We continue to build good foundations for longer-term growth at Debenhams by becoming a destination, digital and different.”

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