Debenhams plunges as it cuts profit forecast

Bloomberg

Debenhams Plc plunged as much as 20 percent after the British department-store owner, struggling to compete with online rivals, cut its profit forecast for the third time this year and reined in spending on turnaround efforts.
The latest warning deepens a UK retail crisis that has claimed longtime fixtures of the country’s shopping streets such as BHS and prompted House of Fraser and Marks & Spencer Group Plc to shut dozens of stores. They’re all being squeezed by the rise of Amazon.com Inc. and online apparel seller Asos Plc, with bargain hunters turning to discount clothing chains like Primark
as the UK’s departure from the European Union squeezes spending power.
“We have seen that the situation in the UK has really weakened,” Debenhams Chief Executive Officer Sergio Bucher said. “When you look at key components of our business, clothing has been losing and footwear has been shrinking,” while the beauty business has seen a slowdown in its makeup arm despite an improvement in
skin care.
While the company’s e-commerce business is growing, Debenhams is playing catch-up to more digital-focussed rivals. Nearly one-fifth of the country’s retail sales have shifted online, leaving Debenhams’ brick-and-mortar profits stuck in a long-term decline. The company expects a pretax profit of $46.4 million to 40 million pounds, compared with a market consensus of 50.3 million pounds.
Debenhams shares shares were down 8.1 percent in London, dragging the company’s market value to 221 million pounds — around the lowest since the company’s initial public offering in 2006 at a valuation of almost 2 billion pounds.
Debenhams said it’s reviewing noncore assets, including its Magasin du Nord stores in Denmark.