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Further cost cutting planned at Debenhams after profit warning

PUBLISHED: 08:32 19 June 2018 | UPDATED: 08:32 19 June 2018

Debenhams has issued a profit warning. Picture: Peter Byrne/PA

Debenhams has issued a profit warning. Picture: Peter Byrne/PA

Archant

Further cost cuts are on the horizon at Debenhams after the retailer issued a profit warning.

The company said “increased competitor discounting and weakness in key markets” had led to “below plan” trading in May and early June.

It now expects full year pre-tax profits to come in between £35m and £40m – down from previous estimates of £50.3m.

As it issued the warning, Debenhams said it will be “prioritising cash generation” and will conduct a review of “non-core assets” in an attempt to focus investment.

Chief executive 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.”

Debenhams shares were down more than 16% in early trading after the profit warning was issued.

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