UK department-store owner Debenhams Plc warned that earnings this year will be less than analysts forecast after a weak holiday period in which post-Christmas sales fell flat and the company cut prices. The stock plunged as much as 24 percent.
Pretax profit probably will be 55 million pounds to 65 million pounds ($74 million to $88 million) in the year ending Aug. 31 if current volatile, competitive business conditions persist, the London-based company said Thursday in a statement. Analysts expect 82 million pounds, the average of 16 estimates compiled by Bloomberg.
Comparable sales in the 17 weeks through Dec. 30 fell 1.3 percent, Debenhams said. The company increased markdowns to try to spur sales, and identified an additional 10 million pounds in cost savings beyond previous guidance.
“The market has been challenging and particularly promotional in some of our key seasonal categories and we have responded in order to remain competitive for our customers, which has impacted our profit performance,” Chief Executive Officer Sergio Bucher said in the statement.
Debenhams shares plunged 18 percent to 29.22 pence at 8:10 a.m. in London. The intraday drop was the biggest ever for the company, which went public in 2006. Before Thursday, the stock had fallen 31 percent in the past year, valuing the company at 436.9 million pounds.
The profit warning tempers optimism over UK retailers’ prospects that was fueled by an upbeat assessment Wednesday from apparel and home-furnishings seller Next Plc. Next raised its profit guidance and said it saw cost pressure easing this year after a decline in the pound increased sourcing costs in 2017. UK store owners struggled last year with the rise of online shopping and the Brexit-fueled currency weakness.