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.


Porsche first German carmaker to abandon diesel engines

Updated 23 September 2018
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Porsche first German carmaker to abandon diesel engines

  • The company would concentrate on its core strength, ‘powerful petrol, hybrid and, from 2019, purely electric vehicles’
  • But Porsche promised it would keep servicing diesel models on the road now

BERLIN: Sports car maker Porsche said Sunday it would become the first German auto giant to abandon the diesel engine, reacting to parent company Volkswagen’s emissions cheating scandal and resulting urban driving bans.
“There won’t be any Porsche diesels in the future,” CEO Oliver Blume told the newspaper Bild am Sonntag.
Instead, the company would concentrate on what he called its core strength, “powerful petrol, hybrid and, from 2019, purely electric vehicles.”
The Porsche chief conceded the step was a result of the three-year-old “dieselgate” scandal at auto giant Volkswagen, the group to which the luxury sports car brand belongs.
VW in 2015 admitted to US regulators to having installed so-called “defeat devices” in 11 million cars worldwide to dupe emissions tests.
It has so far paid out more than €27 billion in fines, vehicle buybacks, recalls and legal costs and remains mired in legal woes at home and abroad.
Diesel car sales have dropped sharply as several German cities have banned them to bring down air pollution — a trend that Chancellor Angela Merkel was due to discuss with car company chiefs in Berlin later Sunday.
Stuttgart-based Porsche in February stopped taking orders for diesel models, which it had sold for nearly a decade.
Blume said Porsche had “never developed and produced diesel engines,” having used Audi motors, yet the image of the brand had suffered.
“The diesel crisis has caused us a lot of trouble,” he said, months after Germany’s Federal Transport Authority ordered the recall of nearly 60,000 Porsche SUVs in Europe.
Blume promised that the company would keep servicing diesel models on the road now.
According to the paper, Porsche also faces claims of having manipulated engines to produce a more powerful sound with a technique that was deactivated during testing.
Blume acknowledged that German regulators had found irregularities in the 8-cylinder Cayenne EU5, affecting some 13,500 units.
Merkel, Transport Minister Andreas Scheuer and heads of German auto companies were due to meet in Berlin later Sunday to discuss steps to avoid more city driving bans.
The German government hopes to see one million fully electric and hybrid vehicles on the road by 2022, up from fewer than 100,000 at the start of this year.