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Debenhams cuts earnings forecast after weak trading

By Prachi Singh

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Report

Debenhams Plc, in its financial update for the 15 weeks and 41 weeks to June 15, 2018 said group gross transaction value declined 1.5 percent and 1.6 percent respectively. Group like-for-like sales for the 15 weeks dropped 1.7 percent and were down 2.1 percent in the 41 weeks, while in constant currency like-for-like sales declined 2.2 percent and 2.6 percent respectively.

Commenting on the company’s performance, Sergio Bucher, the company’s CEO, said in a statement: "It is well-documented that these are exceptionally difficult times in UK retail, and our trading performance in this quarter reflects that. We don't see these conditions changing in the near future and, because it is our priority to maintain a robust balance sheet, we are making very careful choices about how we deploy capital."

Debenhams’ digital sales grew 16 percent for the 15 weeks and 11.5 percent for the 41 weeks period. The company has revised its gross margin guidance to negative 150bps.

Debenhams added that against a background of increased competitor discounting and weakness in key markets, trading in May and early June has been below plan despite weak comparatives. After reassessing its expectations for the balance of the year and the company now expects pre-tax profit for FY2018 to be in the range of 35 million pounds-40 million pounds (46 to 52.9 million dollars), with EBITDA in the range 160-165 million pounds (211.5 to 218 million dollars) . This compares with current market PBT consensus of 50.3 million pounds (66.5 million dollars).

Picture:Debenhams image library

Debenhams