Debenhams is to accelerate its turnaround programme and has reported a steep fall in first-half profits.
Debenhams said that it had delivered “digital growth ahead of the market” and was encouraged by the performance of new-format stores, but that “the UK retail market is undergoing profound change”.
Underlying profit before tax and exceptionals plunged 51.9% in the period to March 3, when group gross transaction value slipped 1.6% to £1.65bn.
The retailer said that full-year profits were now expected to come in at the lower end of City expectations of between £50m and £61m.
Like-for-likes fell 2.2% “against a challenging UK market background”, the department store group said. The final trading week was disrupted by extreme weather conditions, when almost 100 stores had to shut temporarily and the New Season Spectacular promotion was disrupted. That accounted for about 1% of the like-for-like fall.
Debenhams notched up digital growth of 9.7%, “driven by further strong growth in mobile and improved conversion rates”.
The retailer said its new-format trials had achieved “encouraging results” and changes would be rolled out to cover 35% of the UK stores’ sales base.
Debenhams chief executive Sergio Bucher, who is leading the Debenhams Redesigned revival strategy, said: “The UK retail environment is undergoing profound change, and with the help of some important new senior hires, we are moving faster and working harder than ever to ensure Debenhams is well-placed to outperform in this new retail world.
“We expect no help from the external environment, so we are focused on delivering our Debenhams Redesigned strategy, aiming to mitigate difficult trading conditions through self-help initiatives.
“It has not been an easy first half and the extreme weather in the final week of the half had a material impact on our results. But I am hugely encouraged by the progress we are making to transform Debenhams for our customers.
“We are holding share in a difficult fashion market, and in other categories such as furniture, exciting new partnerships have the potential to transform our offer.
“We approach the remainder of the year mindful of the very challenging market conditions, but with confidence that we have a strong team and the right plan to navigate them and return Debenhams to profitable growth.”
Separately, Debenhams said chief financial officer Matt Smith is leaving to become financial director of Selfridges. A search has begun for his replacement.