Unhappy new year for Debenhams

Debenhams struggles to stay afloat in a 'sea of red' and its finance boss walks out.

by Kate Bassett
Last Updated: 13 Jan 2014

Debenhams is hoping that 2013 'be forgot and never brought to mind' as it revealed profits nearly £30m lower than last year.

In its second profit warning in less than a year, the department store group said it expected to make a pre-tax profit of £85m for the 17 weeks to 28 December, a 26 per cent drop on the £114.7m it made in the same period last year.

Chief executive Michael Sharp said that the 'final surge' in sales expected around Christmas had failed to materialise. He also blamed the poor performance on the continuing decline of the high street, the impact of the recession on household incomes and the bad weather (yes, that old chestnut).

He called it the 'most difficult trading conditions that I have experienced' and said the high street had been a 'sea of red'.

Shares in Britain's second-largest department store plunged by as much as 13% yesterday following the profit warning.

Then came another blow: Simon Herrick, the company’s finance boss, announced his resignation. Herrick will step down with immediate effect, leaving Debenhams on 7 February after just two years in the job.

It looks like 2014 is going to be one tough year for Debenhams, with Sharp lamenting that 'there’s nothing on the horizon to give us any confidence that consumer sentiment is going to improve'.

At the other end of the spectrum, John Lewis, which has laughed in the face of high-street gloom (it enjoyed its biggest ever day on 27 December, generating sales of more than £35m), outlined a series of ambitious growth plans to almost double in size and expand overseas.

House of Fraser said it had also enjoyed its best Christmas trading period on record, helped by a jump in online sales.

One thing's for sure: Debenhams is going to have to stop blaming the weather.

 

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