Debenhams' profits crash 84 per cent amid 'very challenging' United Kingdom market

London skyline

London skyline

Debenhams has blamed tough trading conditions and bad weather for an 85% slump in pre-tax profits, after the "beast from the east" forced the retailer to temporarily shut nearly 100 stores.

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.

Like-for-like sales have declined by 2.2 per cent, although there has been 9.7 per cent online growth.

The clothes retailer said its bottom line pre-tax profits fell from £87.8m to £13.5m after around 100 stores were forced to temporarily close due to the weather.

Following a holiday season in which United Kingdom consumers shifted to e-commerce merchants such as Amazon.com and hunted for bargains, full-year pretax profit will be at the lower end of brokers' forecasts ranging from £50 million to £61 million (€57.3 million to €69.9 million), Debenhams said in a statement Thursday.

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Excluding these extra costs, underlying profit before tax was £42.2m, down 51.9%.

Debenhams tumbled after the United Kingdom department-store operator said its chief financial officer is leaving to join a rival, and profit will be at the lower end of an already-reduced forecast range.

Debenhams unveiled a £10m cost-saving plan in January after a profit warning owing to poor Christmas trading.

The company said it had strengthened its senior management team with key hires at all levels, including a new managing director of fashion and home.

He added: "It is also predictable that all this is dressed up with more guff from the new CEO Sergio Bucher about the success and the acceleration of his "Debenhams Redesigned" strategy, but it is interesting that the CFO Matt Smith doesn't want to hang about to see the results of this and is off to take the much easier job of being FD of Selfridges".

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