Debenhams cuts holiday prices, sales dropStaff Writer | January 4, 2018
Debenhams slashed its annual profit forecast after it was forced to cut prices to drive Christmas gift sales, hammering its shares and putting the stock on track for its worst ever daily fall.
Retail British department store operator
Shares fell 20 percent and weighed on fellow retailers such as Marks & Spencer, just a day after an upbeat statement from Next raised hopes that retailers had defied forecasts for gloomy Christmas trading.
"The market has been challenging and particularly promotional in some of our key seasonal categories and we have responded in order to remain competitive for our customers, which has impacted our profit performance," Debenhams chief executive Sergio Bucher said.
Debenhams, Britain's second-biggest department store operator which trades from over 240 stores across 27 countries, is in the midst of a transformation programme to close some stores and revamp the others.
It said it managed to increase like-for-like sales by 1.2 percent in the six weeks to Christmas after it cut the price of gifts. With shoppers failing to return to the stores after Christmas, it cut prices again, at a heavy cost to its margins.
It said its gross margin for the first half would now be down by about 150 basis points, far below its target of a 25 basis point fall for the year to September 2018. It said its profit before tax for the year was now likely to be in the range of 55 million to 65 million pounds ($88 million). ■