Debenhams snowed under

Debenhams snowed under

It seems strange to be blaming snow during a heatwave, but that’s exactly what department store chain Debenhams (DEB) did to explain away a 52 per cent crash in underlying half-year pre-tax profits. The group hasn’t failed to point out that the retail market is “volatile”, but it says heavy snow in March forced the temporary closure of 100 stores, which had a negative 1 per cent impact on like-for-like sales (which fell 2.2 per cent overall). A disappointing Christmas had prompted widespread and prolonged discounting, which widened the gross margin decline to 160 basis points. This dragged cash profits down by 39 per cent, while pre-tax profits took a battering from exceptional charges related to chief executive Sergio Bucher’s ‘Debenhams Redesigned’ recovery plan. The dividend also halved to 0.5p, with the implication being that free cash can be put toward future investments.

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