Department store Debenhams sees full year profits dive
DEPARTMENT store chain Debenhams has reported a collapse in annual profits as boss Sergio Bucher bemoaned an "uncertain" trading environment.
The retailer said pre-tax profit fell 44 per cent to ?59 million in the year to September 2, with like for like sales in the UK coming in flat.
The company also booked a ?36.2 million exceptional charge linked to a restructure being undertaken by the chief executive.
Sales rose 2 per cent to ?2.95 billion and Mr Bucher said that Debenhams is "making progress".
"We are making good progress with implementing our new strategy, Debenhams Redesigned, and are encouraged by the results from our initial trials, as well as the number of exciting new partners who want to work with us.
"The environment remains uncertain and we face tough comparatives over the key Christmas weeks."
The chief executive, who took over a year ago, is attempting a turnaround of the firm and the figures show he has made some headway.
Sales of beauty, accessories and food and drink helped to mitigate the impact of a weaker clothing market, Debenhams said, with food sales rising 8 per cent.
Group like-for-like sales in the year rose 2.1 per cent.
However, like other retailers, Debenhams is grappling with soaring inflation linked to the Brexit-hit pound.
Inflation, which has soared since the referendum and stands at 3 per cent, has seen costs rocket and is tightening the squeeze on consumer spending, hitting retail sales across the board.
To mitigate the impact, Debenhams has also been shaking up its supply chain.
"We continue to invest in supply chain improvements which are helping to mitigate some of the additional currency-related costs. In relation to those costs we are unable to offset, we intend to maintain our competitive position, reacting to market conditions as appropriate," the group said.
In April, Mr Bucher revealed plans to close 11 warehouses and put up to 10 stores under review, in a move affecting at least 220 jobs.
His turnaround will also see the group cull in-house brands and leave some international markets, while also shifting around 2,000 staff to customer-facing roles as part of a drive to lure shoppers back to its stores.
He said on Thursday: "We are well prepared for peak trading and the early signs from our activity to date confirm that we are moving in the right direction towards a successful and profitable future for Debenhams."