Debenhams profit drops 84.6 per cent and CFO leaves for greener pastures
Debenhams announced a dramatic drop in profits this morning, while its finance chief departed the company for a position at Selfridges.
But chief executive Sergio Bucher insisted that the retilaer is on the right track to return to profitable growth.
Shares in the company were down as much as 12.6 per cent in early trading following the announcement.
The figures
Profit before tax in the first half was down 84.6 per cent to £13.5m, compared to £87.8m last year.
On an underlying basis, profits halved to £42.2m. Earnings before interest tax, depreciation and amortisation came to £103.5m, 30 per cent lower than last year.
Like-for-like sales were down 2.2 per cent.
The company halved its dividend to 0.5p per share.
Why it’s interesting
Debenhams already warned that its profits would be drastically lower after Christmas sales were disappointing.
The company today put a brave face on it, saying its digital growth was ahead of the market at over nine per cent, while its ‘Debenhams Redesigned’ strategy has yielded encouraging results in new store formats.
It is now making more drastic changes, including ditching long-standing designer lines from John Rocha and Jeff Banks in favour of Richard Quinn and a premium line from Preen.
The company also plans to phase out its own furniture business, focusing on soft furnishing instead while partnering with furniture retailers such as Maisons du Monde and Swoon.
The rollout of more cafes and restaurants in stores has exceeded the group’s expectations, with a Nando’s and three other brands in its Stevenage store now accounting for 30 per cent of sales.
But the departure of Matt Smith as chief finance officer comes as another blow for the retailer. He will take up the role of finance director at Selfridges once a successor has been found.
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What Debenhams said
Chief executive Sergio Bucker said: “It has not been an easy first half and the extreme weather in the final week of the half had a material impact on our results. But I am hugely encouraged by the progress we are making to transform Debenhams for our customers.
“Our digital growth continues to outpace the market while our store in Stevenage was recently named best new store at the Retail Week Awards. We are holding share in a difficult fashion market, and in other categories such as furniture, exciting new partnerships have the potential to transform our offer. We approach the remainder of the year mindful of the very challenging market conditions, but with confidence that we have a strong team and the right plan to navigate them and return Debenhams to profitable growth.”
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