Debenhams has said it will no longer be able to make the profits it forecast for its full year, following increased financing costs and continuing “trade headwinds”.
The department store today announced that its 10 January statement, which said it would deliver full-year profits in line with market expectations, “is no longer valid”.
The trading update clarified: “Further to our announcement of 12 February regarding the additional £40m bridge facility, discussions with stakeholders have now progressed to include options to restructure our balance sheet in order to address our future funding requirements, and are continuing constructively.
“While trading headwinds have moderated in recent weeks, this process is likely to be disruptive to our business in the coming months. Taken together with macro-economic uncertainties and increased financing costs as a result of additional working capital needs, this means that the group’s statement made on 10 January that we were ‘on track to deliver current year profits in line with market expectations’ is no longer valid. We will provide a further update with our interim results announcement.”
Group gross transaction value for the 26 weeks to 2 March declined 5.4%, and the like-for-like fall was 5.3%. UK sales were down 6% and international sales fell 2.3%. Digital sales grew by 2% across the 26 weeks.
Chief executive Sergio Bucher said: “We are making good progress with our stakeholder discussions to put the business on a firm footing for the future. We still expect that this process will lead to around 50 stores closing in the medium term.
“Our priority is to secure the best outcome for the business and all our stakeholders, while minimising the number of store closures and job losses. To do this, as we have said before, we will need the support of both landlords and local authorities to address our rents, rates and lease commitments. I would like to thank our staff – and all our stakeholders – for their continued support through this period, as we work to deliver a sustainable future for the company.”