LONDON: British department store chain Debenhams warned on profits on Tuesday, sparking a slump in its share price and compounding the gloom for large UK retailers.
Debenhams said that annual profits were expected to miss expectations, blaming falling sales, fierce competition and weak consumer spending.
The news sent Debenhams’ share price tumbling 20 per cent in morning deals.
“Against a background of increased competitor discounting and weakness in key markets, trading in May and early June has been below plan,” said Debenhams, which has 240 stores worldwide including 176 in the UK and Ireland.
In a statement, the group said that it expects pre-tax annual profit of between £35 million and £40 million ($46 million and $53 million). Analysts’ consensus forecast had been for £50.3 million.
In later morning deals, Debenhams’ share price recovered to stand at 18.40 pence, but still down 6.12 per cent from Monday’s closing level.
Major UK retailers are increasingly facing tough times in the face of intense online competition from the likes of US giant Amazon.
The UK is experiencing also weak household spending amid Brexit uncertainty.
Chinese-owned department store chain House of Fraser is closing more than half its shops across Britain and Ireland, risking the loss of 6,000 jobs.
Clothing-to-food retailer Marks & Spencer is meanwhile shutting more than 100 UK stores as it looks to shift at least one third of sales online.
Elsewhere, UK budget chain Poundworld could collapse with the loss of up to 5,100 jobs unless a last-ditch buyer is found.
Poundworld is also battling against heavy discounting by supermarkets.— AFP
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