Debenhams blames snow for fall in half-year profits

Debenhams on Thursday reported a fall in half-year profit, blaming snow in the UK in January.

Debenhams on Thursday reported a fall in half-year profit, blaming snow in the UK in January.

The retailer's pre-tax profits for the six months to March 2nd dropped 5.4% year-on-year to £120.3m as cold weather discouraged shoppers.

The UK was disrupted by snow during the two significant trading weeks at the end of January that marked the end of the department chain's winter sale. UK like-for-like sales were down 10% during the period.

"We took action to strengthen our promotional calendar in February but this was not sufficient to recover all those sales lost in January," the company said.

Despite the weather's hit to revenues in January, group sales were up 3.1% for the half-year boosted by strong performance over the Christmas period.

The company achieved record sales in December up 5.0% on a like-for-like basis, aided by the first Christmas brand marketing campaign for six years.

Online shopping accounted for 12.7% of overall sales growth as it rose 46%.

A gross transaction value of £1.5bn was 3.5% higher than last year as market share gains were achieved in clothing and non-clothing product categories.

During the period, the group made further progress to build its international and multi-channel brand.

The firm invested in modernising shops and transforming London's Oxford Street into its international flagship store.

The interior of the Oxford Street store will be completed in time for this year's peak trading with a phased reveal of the kinetic faade taking place between August 2013 and February 2014.

Sales disruption due to this project is in line with previous guidance of 10% and is expected to continue at this level in the second half.

The UK store portfolio stood at 155 stores at the end of the first half, up from 153 the previous year.

Net debt rose to £321.6m from £311.8m due to investments.

Debenhams maintained a dividend of 1.0p per share.

"We expect to make further progress in the second half despite consumer sentiment remaining weak and challenging market conditions," said Chief Executive Michael Sharp.

"We are committed to the opportunities afforded to us by the four pillars of our strategy to build a leading international, multi-channel brand. We are sure that this strategy is right for Debenhams and of the benefits it brings to the business and its shareholders."

RD

Recommended

Avoid easyJet shares – there are better airlines to invest in
Share tips

Avoid easyJet shares – there are better airlines to invest in

EasyJet used to be one of Europe’s most impressive airlines. But now it is facing challenges on all fronts and losing out to the competition. Rupert …
16 May 2022
Britain’s ten most-hated shares – w/e 13 May
Stocks and shares

Britain’s ten most-hated shares – w/e 13 May

Rupert Hargreaves looks at Britain's ten-most hated shares, and what short-sellers are looking right now.
16 May 2022
Anna Macdonald and Mikhail Zverev: Investing in innovative new frontiers
Investment strategy

Anna Macdonald and Mikhail Zverev: Investing in innovative new frontiers

Merryn talks to Anna Macdonald and Mikhail Zverev of Amati about investing in growth-focused innovation in the teeth of a tech-stock selloff, and the …
12 May 2022
BT is making progress and the dividend is back – but is it time to buy yet?
Share tips

BT is making progress and the dividend is back – but is it time to buy yet?

Investors in telecoms giant BT have seen dismal returns over the last 15 years. But there are signs that it is starting to turn things around, says Ru…
12 May 2022

Most Popular

Get set for another debt binge as real interest rates fall
UK Economy

Get set for another debt binge as real interest rates fall

Despite the fuss about rising interest rates, they’re falling in real terms. That will blow up a wild bubble, says Matthew Lynn.
15 May 2022
High inflation will fade – here’s why
Inflation

High inflation will fade – here’s why

Many people expect high inflation to persist for a long time. But that might not be true, says Max King. Inflation may fall faster than expected – and…
13 May 2022
What the Ukraine crisis might mean for ESG investing
Advertisement Feature

What the Ukraine crisis might mean for ESG investing

The Ukraine crisis has brought many of the issues around ESG investing into sharper focus. Where does the sector go from here?
3 May 2022