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Debenhams shares drop after it withdraws FY outlook
[LONDON] Shares of Debenhams Plc fell about 12 per cent on Tuesday, after the department store chain withdrew its previous full-year outlook, saying talks with stakeholders to restructure its balance sheet would likely be disruptive.
Once the country's biggest department store operator, Debenhams has reported a string of profit warnings as it failed to keep pace with consumers moving online and to cheaper outlets.
The company, which said in January it was on track to hit an annual profit target of 8.2 million pounds, said on Tuesday that the outlook was no longer valid.
Debenhams said talks with stakeholders had now progressed to include options to restructure its balance sheet to address its future funding requirements. It had in February secured 40 million pounds in extra funding from some lenders.
"While trading headwinds have moderated in recent weeks, this (restructuring) process is likely to be disruptive to our business in the coming months," Debenhams said in a statement.
It also blamed weaker retail spending and higher financing costs as a result of additional working capital needs.
However, a 5.3 per cent fall in like-for-like sales in the first half to March 2 was an improvement over the 5.7 per cent drop in the first 18 weeks of the financial year.
The company said it still expects to shut 50 stores in the near future, and added that its annualised 80 million cost saving programme was on track.
Shares of the company were down 4.5 per cent at 3.05 pence in early trading.