Home BreakingDebenhams issues third profit warning in six months

Debenhams issues third profit warning in six months

by
19th Jun 18 7:50 am

More retail distress

Department store Debenhams issued a profit warning today for the third time in six months due to poor trading on increased competitor discounting and weakness in key markets.

The firm said it is now forecasting a pretax profit for the 2018 financial year of ยฃ35-40m compared to current market expectations of ยฃ50.3m.

โ€œIt is well-documented that these are exceptionally difficult times in UK retail, and our trading performance in this quarter reflects that,โ€ said Chief Executive Sergio Bucher.

โ€œWe donโ€™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.โ€

Richard Lim, Chief Executive, Retail Economicsย said: โ€œThese results build on the pessimistic outlook for UKย retail. Itโ€™s clear that the business is battening down the hatches, strengthening its balance sheets and preparing for tough times ahead.ย 

โ€œWeโ€™ve seen a slew of bad news this year and the acceleration of structuralย changes is taking its toll on departmentย stores who are burdened by significant fixed costs. Shackled by too much space, inflexible leases and, in some cases, too much debt, the race is on to execute a shift in business models quickly enough to keep up with changing market conditions.ย 

โ€œConcerns about overcapacity is at the heart of the challenge for many retailers. Debenhams, along with many others, will need to push forward right-sizing initiatives and form strategic partnerships with other third parties to sweat assets more effectively in a move become fit-for-purpose in todayโ€™s digital age.โ€ย 

Leave a Comment

CLOSE AD

Sign up to our daily news alerts

[ms-form id=1]