Retail stalwart Debenhams has provided a cautious profit forecast for the year, citing a disappointing trading performance throughout autumn and a lacklustre start to the crucial post-Christmas sales period.
In a trading update on Thursday the group said that gross transaction value for the 17 weeks to the end of December fell by 0.8 per cent.
“The early weeks of the quarter were disappointing as the market remained volatile and competitive,” it said in the statement, adding that the “first week of post-Christmas Sale was below expectations”.
As a result of this, it said that – if the current volatile trading environment persists – profit before tax for the full year is likely to be in the range of £55m to £65m. According to Reuters analysis, forecasters had largely been expecting a figure of around £83m.
Sergio Bucher, the company’s chief executive, said that because of how challenging the market was, Debenhams had been forced to offer promotions in order to stay competitive, which had directly hit profits.
“The market dynamics we have seen have reinforced our view that we need to move even faster to implement the cultural and organisational changes needed to ensure Debenhams is in the best possible shape for today’s fast-changing retail environment,” he said.
Debenhams posted profit before tax of just over £95m last year.
The group’s trading update contrasts sharply with figures for the Christmas period offered by John Lewis and Next earlier in the week. The former revealed record-breaking sales during the week running up to Christmas on Wednesday, saying that sales had jumped 4 per cent in the week to 23 December compared to the same period a year earlier. Next on the same day said that full-price sales rose by 1.5 per cent in the 54 days from 1 November to 24 December, compared to the same period in 2016.
Next also said that this better-than-expected performance had encouraged it to marginally nudge up its profit guidance for full-year results.
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