Debenhams warns on profits as Christmas shoppers stay away

Debenhams reported that an expected last-minute rush of shoppers failed to materialise. As a result margins in the first half will fall by between 80 and 100 basis points because of extra markdown.

Interim profits are expected to come in at approximately £85m versus £114.7m in the comparable period last year.

Debenhams blamed an “unprecedented level of promotional activity across retail prompted by slow footfall on the high street, pressure on household income and the effects of unseasonal weather on clothing sales”.

The retailer reported group gross transaction value up 0.7% and like-for-like sales growth of 0.1% in the 17 weeks to December 28.

Online sales climbed by 27% to account for 15.6% of total sales compared with 12.4% for the same period last year.  However, “online delivery income was lower than anticipated”.

Debenhams chief executive Michael Sharp said: “As has been widely commented on in the media, the market was highly promotional in the run-up to Christmas and we responded to these conditions to ensure our offer was competitive. 

“However, this extremely difficult environment has inevitably had an impact on both our sales and profitability.

“Looking forward, I expect conditions to remain highly competitive as we enter 2014.

“Everyone in the organisation is focused on improving performance and growing the business, building on the four pillars of our strategy which I remain confident will lead to success over the longer term.”