UK’s Debenhams warns on profit again, blames weak market

British retailer Debenhams is faced with having to make further cost savings (Hannah McKay/Reuters)
Updated 19 June 2018
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UK’s Debenhams warns on profit again, blames weak market

  • Debenhams said group like-for-like sales fell 1.7 percent in the 15 weeks to June 16
  • The firm said it is now forecasting a pretax profit for the 2018 financial year of 35-40 million pounds ($46-$53 million)

LONDON: British department store Debenhams warned on profit for the third time in six months on Tuesday, blaming poor trading on increased competitor discounting and weakness in key markets.
The firm said it is now forecasting a pretax profit for the 2018 financial year of 35-40 million pounds ($46-$53 million) compared to current market expectations of 50.3 million pounds.
It is planning for “a material reduction” in capital expenditure in the 2019 financial year and also intends to conduct a strategic review of non-core assets, having already committed to 20 million pounds of cost savings.
Debenhams said group like-for-like sales fell 1.7 percent in the 15 weeks to June 16.
“It is well-documented that these are exceptionally difficult times in UK retail, and our trading performance in this quarter reflects that,” said Chief Executive Sergio Bucher.
“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.”
Bucher, a former Amazon and Inditex executive who joined Debenhams in 2016, is one year into a turnaround plan focused on closing some stores, downsizing others, cutting promotions and improving online service, while seeking cost savings.
But his progress has been hampered by changing shopping habits, a squeeze on UK consumers’ budgets, a shift in spending away from fashion toward holidays and entertainment, as well as intense online competition.


Chinese president Xi urges financial risk prevention while seeking stable growth

Updated 31 min 30 sec ago
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Chinese president Xi urges financial risk prevention while seeking stable growth

  • China’s economy is growing at its slowest pace in almost 30 years
  • Preventing and resolving financial risks, especially systemic financial risks, is a fundamental task

BEIJING: China should seek stable development of its economy while not forgetting to fend off risks to its financial system, Chinese President Xi Jinping said, state news agency Xinhua reported on Saturday.
China’s economy is growing at its slowest pace in almost 30 years, spurring policymakers to bolster growth by easing credit conditions and cutting taxes.
“It is necessary to focus on preventing risks on the basis of steady growth, while strengthening the countercyclical adjustment of fiscal policy and monetary policy and ensuring that the economy operates in a reasonable range,” Xi said.
Preventing and resolving financial risks, especially systemic financial risks, is a fundamental task, the agency cited Xi as telling a study session for senior Communist Party officials on Friday.
On Wednesday, Premier Li Keqiang reiterated that China would not resort to “flood-like” stimulus such as it unleashed in past downturns.
But after a spate of weak data, investors are asking if Beijing needs to speed or boost support to reduce the risk of a sharper slowdown.
Until now, China has refrained from cutting benchmark interest rates to spur the slowing economy, which would ease financing costs but risk adding to a mountain of debt.
To free up more funds for lending to small and private businesses, the central bank has cut the reserves that banks need to set aside five times in the past year.
Last month, Chinese banks made the most new loans on record, a total of 3.23 trillion yuan ($481 billion). A central bank official said previously that no credit floodgate had been opened, and the lending jump showed recent easing steps were working.
China’s financial sector must serve the real economy, Xi said, but stable growth and risk prevention must be balanced.