Uncertain trading hits Debenhams profit

Debenhams is in the process of revamping its large town superstores
Debenhams is in the process of revamping its large town superstores
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​Department store chain Debenhams has reported a collapse in annual profits ​following what it described as an​ uncertain trading environment​​.​

The group's chief executive​ Sergio Bucher ​said: ​"The environment remains uncertain and we face tough comparatives over the key Christmas weeks."

The retailer is in the process of revamping its large town superstores in a bid to attract customers who now see shopping as a leisure pastime.

​​"We are making good progress with implementing our new strategy, Debenhams Redesigned, and are encouraged by the results from our initial trials, as well as the number of exciting new partners who want to work with us​," said Mr Bucher.​

Debenhams reported a 44 per cent fall in pre-tax profit to £59​m in the year to September 2​ and said UK like​-​for​-​like sales​ were flat.

The company also booked a £36.2​m exceptional charge linked to​ its​ restructure.

​Group s​ales rose 2​ per cent​ to £2.95​bn and Mr Bucher said ​the group is making progress.

The chief executive, who took over a year ago, is attempting a turnaround of the firm and the figures show he has made some headway.

Sales of beauty, accessories and food and drink helped to mitigate the impact of a weaker clothing market, with food sales rising 8​ per cent​.

Group like-for-like sales in the year rose 2.1​ per cent​.

However, like other retailers, Debenhams is grappling with soaring inflation linked to the ​fall in the pound​ since the EU referendum​.

​Rising i​nflation, which ​now ​stands at 3​ per cent​, has ​caused costs ​to ​rocket and ​and has​ tighten​ed​ the squeeze on consumer spending, hitting retail sales across the board.

To mitigate the impact, Debenhams has also been shaking up its supply chain.

"We continue to invest in supply chain improvements which are helping to mitigate some of the additional currency-related costs. In relation to those costs we are unable to offset, we intend to maintain our competitive position, reacting to market conditions as appropriate," the group said.

In April, Mr Bucher revealed plans to close 11 warehouses and put up to 10 stores under review, in a move affecting at least 220 jobs.

His turnaround will also see the group cull in-house brands and leave some international markets, while also shifting around 2,000 staff to customer-facing roles as part of a drive to lure shoppers back to its stores.

"We are well prepared for peak trading and the early signs from our activity to date confirm that we are moving in the right direction towards a successful and profitable future for Debenhams​,​"​ he said.​