* Adviser KPMG examines options for retailer Debenhams
* Options include Company Voluntary Arrangement
* CVA would see stores close, rents reduced
* Firm says to make profit expectations for 2017-18 year
* Shares fall as much as 19.5 pct to record low(Adds details of Debenhams' latest statement, updates shares)
By James Davey
LONDON, Sept 10 (Reuters) - Struggling British departmentstore chain Debenhams is reviewing its options,including a possible legal procedure that could see it closemore stores, it said on Monday.
Shares in the retailer, which has issued three profitwarnings this year, plunged to a new low after it widened theremit of adviser KPMG to include "longer-term options" such as apossible Company Voluntary Arrangement (CVA).
CVAs allow retailers to avoid insolvency or administrationby offloading unwanted stores and securing reduced rents onothers. They have been adopted by British groups includingfashion chain New Look, floor coverings retailer Carpetright, mother-and-baby goods company Mothercare andmost recently home improvements chain Homebase.
Debenhams shares plunged as much as 19.5 percent to a newlow of 10.34 pence on the news, despite the company saying itwould meet profit and debt forecasts for its 2017-18 fiscal year
"The board continues to work with its advisers on longerterm options, which include strengthening our balance sheet andreviewing non-core assets," said Chairman Ian Cheshire.
"This activity is in order to maximise value forshareholders and protect other stakeholders, including ouremployees.”
Debenhams, which employs around 27,000 people globally, saidin June it might sell non-core assets, including its Danishbusiness, to bolster its finances and in July denied it wasfacing a cash crisis over supplier insurance.
The group is in the second year of a turnaround plan underChief Executive Sergio Bucher, a former Amazonexecutive, focused on closing up to 10 stores, downsizing 30others and renegotiating leases and rents on 25 stores up forrenewal over the next five years. It is also trying to cutpromotions and improve its online service.
However, progress has been hampered by a squeeze on UKconsumers' budgets, a shift in spending away from fashiontowards holidays and entertainment, and intense onlinecompetition.
Those trends have particularly damaged the department storesector. BHS went bust in 2016, House of Fraser was bought out ofadministration last month by Mike Ashley's Sports Directand even market leader John Lewis has warned onprofit.
'CHALLENGING MARKET'
"The market environment remains challenging and underlyingtrends deteriorated through the summer months," said Bucher.
"Nevertheless the product and format improvements we havetested are gaining traction and we are ready to scale up some ofour strategic activity ahead of peak (selling season)."
Debenhams said it expected to report a 2017-18pre-exceptional pretax profit of around 33 million pounds ($42.7million), within the current market range of 31-36.5 millionpounds, and year-end net debt of about 320 million pounds, inline with guidance and retaining significant headroom on thefirm's medium term facilities of 520 million pounds.
It said the early weeks of the new season had shown "morepositive trends."
The stock was down 1.7 pence at 10.9 pence at 1345 GMT,valuing the business at about 135 million pounds.(Editing by Gareth Jones and Mark Potter)
