Debenhams says pledge on profits ‘no longer valid’
Debenhams: fresh warning
Debenhams has issued a fresh profits warning and said its statement in January that it was on track to deliver in line with expectations “is no longer valid”.
In an update on trading in the 26 weeks to 2 March the troubled department store chain said like for like sales were down 5.3% and more sharply in the UK (6.0)% with International down (2.3)%. Digital sales have grown by 2.0% across the period.
The annualised £80m cost saving programme is on track, and the firm expects the first ranges resulting from its sourcing partnership with Li & Fung will be in stores in the current season.
Further to its announcement ofn12 February regarding the additional £40m bridge facility, discussions with stakeholders have now progressed to include options to restructure the balance sheet in order to address future funding requirements, and are continuing constructively.
However, the company admitted to continuing difficulties. It said: “While trading headwinds have moderated in recent weeks, this process is likely to be disruptive to our business in the coming months.
“Taken together with macroeconomic uncertainties and increased financing costs as a result of additional working capital needs, this means that the Group’s statement made on 10 January that we were “on track to deliver current year profits in line with market expectations” is no longer valid. We will provide a further update with our interim results announcement.”
Sergio Bucher, chief executive of Debenhams, said: “We are making good progress with our stakeholder discussions to put the business on a firm footing for the future. We still expect that this process will lead to around 50 stores closing in the medium term.
“Our priority is to secure the best outcome for the business and all our stakeholders, whilst minimising the number of store closures and job losses. To do this, as we have said before, we will need the support of both landlords and local authorities to address our rents, rates and lease commitments. I would like to thank our staff – and all our stakeholders – for their continued support through this period, as we work to deliver a sustainable future for the company.”