Debenhams cuts dividend as first-half profit slumps

THE Beast from the East is the reason for a drop of almost 85 per cent in half year profits, according to the Debenhams chief executive.

British department store group Debenhams announced a massive drop in profits - 84.6 per cent to £13.5m, compared to £87.8m past year - amid a "very challenging" United Kingdom market.

The group also posted underlying profits before tax were 51.9% lower than previous year, at £42.2 million, as the group was forced to deliver further discounts to remain competitive.

The department store group said like-for-like sales declined 2.2%, or 2.8% at constant currencies, in the 26 weeks to 3 March, against a "challenging United Kingdom market background".

Experts had expected the fall to be more in the region of £44 million.

It also warned profits for the full year would now be at the lower end of brokers' forecasts of £50m to £61m, compared with £95.2m for the previous year.

The poor first half came in a United Kingdom market that was challenged by volatile consumer spending and disrupted by extreme weather conditions, including...

'But I am hugely encouraged by the progress we are making to transform Debenhams for our customers. We are holding share in a hard fashion market, and in other categories such as furniture, exciting new partnerships have the potential to transform our offer.

The group is one year into a turnaround plan led by Chief Executive Sergio Bucher, a former Amazon and Inditex executive.

The group's chief financial officer, Matt Smith, is leaving after less than three years in the job for rival Selfridges where he will become finance director.

A search for his replacement is now under way. It was previously guiding to 55-65 million pounds.

Around 8.50am, Debenhams shares were 6.6% lower at 21.78p.

The retailer has closed two stores since October in a bid to reduce costs associated with rent and business rates, and has identified a further 10 across the country that could be shut down in due course.

In February, 320 staff were made redundant in a shake-up of middle-management.