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UK's Debenhams warns on profit again, blames weak market
[LONDON] British department store Debenhams warned on profit for the third time in six months on Tuesday, blaming poor trading on increased competitor discounting and weakness in key markets.
The firm said it is now forecasting a pretax profit for the 2018 financial year of 35-40 million pounds (S$62-$71 million) compared to current market expectations of 50.3 million pounds.
It is planning for "a material reduction" in capital expenditure in the 2019 financial year and also intends to conduct a strategic review of non-core assets, having already committed to 20 million pounds of cost savings.
Debenhams said group like-for-like sales fell 1.7 per cent in the 15 weeks to June 16.
"It is well-documented that these are exceptionally difficult times in UK retail, and our trading performance in this quarter reflects that," said Chief Executive Sergio Bucher.
"We don't see these conditions changing in the near future and, because it is our priority to maintain a robust balance sheet, we are making very careful choices about how we deploy capital."
Bucher, a former Amazon and Inditex executive who joined Debenhams in 2016, is one year into a turnaround plan focused on closing some stores, downsizing others, cutting promotions and improving online service, while seeking cost savings.
But his progress has been hampered by changing shopping habits, a squeeze on UK consumers' budgets, a shift in spending away from fashion towards holidays and entertainment, as well as intense online competition.