First-half profit warning sends Debenhams shares tumbling

Debenhams’ shares plummeted today as it announced a profit warning resulting from the severe impact of the snow in January.

First-half profit warning sends Debenhams shares tumbling

Releasing a trading update for the 26 weeks to March 2, the department store retailer said business had been “severely disrupted by the snow which fell across the country”. While group like-for-like sales grew by 3% in the half year, during the snow-affected period of January 14 to 27 UK like-for-likes slumped by 10%.

Additional promotional events in February focusing on Valentine’s Day, half-term and the month end failed to fully recover the sales lost in January, and the sales generated were mainly in lower margin clearance lines.

Debenhams said gross margin for the first half would therefore be 20 basis points lower than last year, and was more likely to be flat for the full year than the 10 basis points increase previously hoped for. The retailer also warned that first-half profits should come in at around £120m instead of the expected £130m – news that sent shares down by more than 10%.

Chief executive Michael Sharp said: “Whilst the impact of the snow on the outcome for the first half is disappointing, it is now behind us and sales volumes have recovered.”

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