LONDON (Alliance News) - Debenhams PLC issued another profit warning Tuesday as it lowered its profit expectations for the current year for the third time, providing further evidence of what it called "difficult times for UK high-street retailers.
Debenhams expects pretax profit for the financial year ending September 2 to be in the range of GBP35 million to GBP40 million, down from the market consensus of GBP50.3 million and GBP59.0 million the year before.
The company said a "background of increased competitor discounting and weakness in key markets" led to trading in May and June being "below plan despite weak comparatives".
Shares in the department store chain were down 12% at 17.31 pence each Tuesday morning, having hit a low of 15.77p at the open.
Debenhams said like-for-like sales for the 15 weeks to date were down 1.7% and its 41 weeks to date like-for-like sales were down 2.1%.
Gross transaction value for the 15 weeks to date was down 1.5% and for 41 weeks to date it was down 1.6%. Digital sales growth for the 15 weeks to date was up 16% and for the 41 weeks to date it was up 12%.
As a result, Debenhams is "planning for a material reduction in financial year 2019 capital expenditure".
The struggling department store expects its year-end net debt to be in line with previous guidance at about GBP320 million.
Chief Executive Officer Sergio Bucher said: "It is well-documented that these are exceptionally difficult times in UK retail, and our trading performance in this quarter reflects that. We don't see these conditions changing in the near future and, because it is our priority to maintain a robust balance sheet, we are making very careful choices about how we deploy capital.
"We see clear evidence of progress as our digital growth outperforms the market and customers respond positively to our product improvements and format trials. We have also put in place a leaner operational structure and made a number of important hires so that we are well-equipped to navigate the market turbulence."