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.


Microsoft beats Wall Street targets on cloud services revenue

A Microsoft logo is seen in Los Angeles, California US, in this November 7, 2017 photo. (REUTERS)
Updated 20 July 2018
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Microsoft beats Wall Street targets on cloud services revenue

  • Revenue for the company’s LinkedIn business and job network grew 37 percent from the year-ago quarter, while its Dynamics 365 online business application suite posted a 61 percent increase
  • Net income rose to $8.87 billion, or $1.14 per share, from $8.07 billion, or $1.03 per share, in the year-ago fourth quarter

NEW YORK: Microsoft Corp. on Thursday posted quarterly profit and revenue that beat analysts’ estimates, as more businesses signed up for its Azure cloud computing services and Office 365 productivity suite.
The company’s flagship Azure cloud product recorded revenue growth of 89 percent in the fourth quarter ended June 30. Its shares rose nearly 4 percent in after-hours trading.
Much of Microsoft’s recent growth has been fueled by its cloud computing business, which has benefited from companies rushing to shift their workloads to the cloud to cut data storage and software costs.
“The combination of the cloud, which is a megatrend that’s going to last for years to come, and the execution, this is company that knows how to sell and be innovative — it’s hard to argue with anything here,” said Tom Taulli, InvestorPlace.com analyst.
Microsoft shares have risen 180 percent since Satya Nadella took over as chief executive in 2014, refocusing the company on cloud computing rather than PC software. Its market cap edged above $800 billion for the first time earlier this month.
Azure has a 16 percent share of the global cloud infrastructure market, making it the second-biggest provider of cloud services after Amazon.com Inc’s Amazon Web Services, according to April estimates by research firm Canalys.
Revenue at Microsoft’s productivity and business processes unit, which includes Office 365, rose 13.1 percent to $9.67 billion, topping analysts’ average expectation of $9.65 billion, according to Thomson Reuters I/B/E/S.
“This was another gem of a quarter from Microsoft as Nadella’s cloud vision is coming to fruit on the heels of massive Azure growth and secular tailwinds,” said Daniel Ives at research firm GBH Insights.
Revenue for the company’s LinkedIn business and job network grew 37 percent from the year-ago quarter, while its Dynamics 365 online business application suite posted a 61 percent increase.
The combination of those two services highlights Microsoft’s rise as an alternative to Salesforce.com Inc, which dominates the customer relationship management market, said Johnny Won, founder of Hyperstop, a tech consultancy firm.
“It seems like this is actually a formidable threat to Salesforce,” Won said.
Overall, the Redmond, Washington-based software maker’s revenue rose 17.5 percent to $30.09 billion, above expectations of $29.21 billion.
Net income rose to $8.87 billion, or $1.14 per share, from $8.07 billion, or $1.03 per share, in the year-ago fourth quarter. https://bit.ly/2uOF9W1
Excluding certain items, Microsoft earned $1.13 per share, while analysts had expected $1.08.