Monday, March 04 14:29:07
British department store group Debenhams said today it expected profits in the first half of its 2012-13 year to fall about eight percent short of forecasts after a blanket of snow smothered January sales.
Shares in Britain's second-largest department store group fell 11 percent to 84 pence after it said in an unscheduled trading update that it expected pretax profit for the 26 weeks to March 2 to be around 120 million pounds.
"What you have to remember is that the snow fell across the whole country, the trading period that was disrupted was smack bang in the middle of the January sale and it covered the month end of January which is a strong trading period," Chief Executive Michael Sharp told Reuters.
With Britain teetering on a third recession in four years retailers have been finding the going tough as consumers fret over job security, a squeeze on incomes and government cuts.
Debenhams did have a decent Christmas and said it was trading well in January before the first significant fall of snow in almost a year hit the country. Analysts had forecast a consensus pretax profit of about 130 million pounds.
In an attempt to recover the lost sales Debenhams introduced additional promotional events in February, focused on Valentine's Day, the school half-term holiday and the month end.
These drove incremental sales but did not fully recover those lost to the snow and came at a cost to profit margins.
The firm said that while sales at stores open over a year grew by about 3 percent in the 26 weeks to March 2, during the snow-affected period of Jan. 14-27 UK like-for-like sales fell about 10 percent. Reuters