Debenhams annual profits dive 44%

Debenhams (LON:DEB) reported a dive in profits of 44 percent for the year, blaming an “uncertain” trading environment.

Despite strong sales across both its beauty and food divisions, restructuring costs weighed on profits for the year.

Like-for-like sales at stores open more than one year rose 2.1 percent across the group, but were flat in the UK. Beauty sales rose 5 percent and food 8 percent, while clothing sales dipped 0.5 percent.

Figures also revealed a shift in consumer habits in favor of online shopping, with mobile sales up by 57 percent.

Overall, group revenues were up 1.1 percent to £2.3 billion. Excluding £36.2 million in restructuring costs, pre-tax profits fell 16.6 percent to £95.2 million.

Chief Executive Mr Sergio Bucher, said in the statement: “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.”

Nevertheless, Mr Bucher warned: “The environment remains uncertain and we face tough comparatives over the key Christmas weeks.”

Mr Bucher assumed the role of Chief Executive earlier in April of this year. The former head of Amazon fashion has been tasked with strengthening the company’s online presence.

During its interim results, the british retailer revealed it intends to close 11 warehouses and place around 10 stores under review.

“Debenhams would appear to embody many of the struggles facing the high street,” said Neil Wilson, a senior market analyst at ETX Capital.

“Shoppers are going online; the weak pound is pushing up input costs, hitting margins; and labour costs are rising,” he said.

“The answer for Debenhams at least is to get its mobile shopping experience better than anyone else. With sales growth of 57 per cent in this segment it looks like it’s on the right track.”

Shares in the department store are currently up marginally by 0.47 percent, as of 10.38AM (GMT).