Debenhams warns on profit after sales are hit by January snow

Shares in High Street retailer Debenhams plunged nearly 10 per cent on Monday after the company issued a profit warning after admitting its UK business had been 'severely disrupted' by the snow in the latter part of January.

Shares in High Street retailer Debenhams plunged nearly 10 per cent on Monday after the company issued a profit warning after admitting its UK business had been 'severely disrupted' by the snow in the latter part of January.

The group said that whilst group like-for-like sales grew by around 3.0% for the 26 weeks to March 2nd, during the snow-affected period of January 14th-27th UK like-for-like sales were down by around 10%.

It warned investors that additional promotional events in February failed to full recover the losses and said the sales generated were mainly in lower margin clearance lines.

As a result, the gross margin for the first half will be around 20 basis points lower than last year and for the year is now more likely to be flat than the 10 basis points increase previously guided to.

As such, profit before tax is expected to be £120m for the financial year.

Looking ahead, the company said it enters the second half with a strong spring/summer collection and stocks at planned levels and said it believes forecasts for the period are "robust", and it will continue to grow sales as expected.

Michael Sharp, the Chief Executive of Debenhams, 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. We are confident in our spring/summer ranges and that we can grow sales in the second half.

"Our strategy to build a leading international, multi-channel brand remains on track and we continue to focus on the four pillars of the strategy and investing in our business for long-term, sustainable growth."

The group said there was no change to its full year guidance on costs, capex, dividends and the share buyback programme.

The share price fell 10.94% to 84.25p by 08:50 Monday.

NR

Recommended

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework
Investment strategy

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework

John Stepek talks to Steve Clapham, investor, analyst and author of The Smart Money Method, about the dangers in picking individual stocks and why you…
8 Apr 2021
BP looks set to return more money to shareholders as it beats expectations
Energy stocks

BP looks set to return more money to shareholders as it beats expectations

Oil major BP is to embark on a share buyback programme after significantly reducing its debts. Saloni Sardana looks at what it means for your portfoli…
6 Apr 2021
Deliveroo has hit the market – but it’s not getting the warmest welcome
UK stockmarkets

Deliveroo has hit the market – but it’s not getting the warmest welcome

Food delivery company Deliveroo made its debut on the stockmarket this morning. But with the share price sliding by 30% straight away, it’s not made t…
31 Mar 2021
Three stocks to buy now that will come back stronger after Covid-19
Share tips

Three stocks to buy now that will come back stronger after Covid-19

Professional investor Ed Wielechowski of Odyssean Capital, chooses three compelling stocks that should thrive in a post-pandemic world.
29 Mar 2021

Most Popular

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021
House prices: from boom to even bigger boom
House prices

House prices: from boom to even bigger boom

UK house prices have risen to new to record highs, says Nicole Garcia Merida. Demand continues to outpace supply, but continued low interest rates, th…
9 Apr 2021
Nuclear power might never be popular – but now looks a good time to invest
Commodities

Nuclear power might never be popular – but now looks a good time to invest

Nuclear power gets a very bad press, but it is the ultimate renewable energy source. Interest in it is perking up again, says John Stepek. Which means…
9 Apr 2021