Debenhams adds to UK retail gloom with new profit warning

A shopper walks past a Debenham's store in central London. The retailer has added to the gloom in the retail sector with a profits warning.
Updated 19 April 2018

Debenhams adds to UK retail gloom with new profit warning

  • First half underlying pretax profit down 52 percent
  • Finance chief quits for job at Selfridges

Department store group Debenhams added to the grim start to 2018 for Britain’s retail sector, lowering its full-year outlook for the second time in four months and cutting its dividend after a 52 percent slump in first half profit.
Shares in Debenhams fell as much as 13 percent on Thursday, taking its year-on-year plunge to 61 percent.
The 240-year old Debenhams, which delivered the sector’s first profit warning of the year in January, also said Matt Smith, its chief financial officer, was quitting to take up the same role at rival Selfridges.
Debenhams is not alone in finding the going tough. Official UK data showed the biggest quarterly fall in retail sales in a year.
Debenhams’ problems have, however, also been self-inflicted.
“We didn’t help ourselves at Christmas because our approach wasn’t good enough,” CEO Sergio Bucher told reporters. Debenhams said in January it had been forced to cut prices to drive sales of Christmas gifts.
Already this year Toys R Us UK, electricals group Maplin and drinks wholesaler Conviviality have plunged into administration, while fashion retailer New Look and floor coverings firm Carpetright are closing stores.
Rival department store group House of Fraser is seeking rent reductions while market leader John Lewis has cautioned on the outlook.
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 or revamping others, cutting promotions and improving online service, while seeking cost savings.
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 and bad weather, including snow in March that temporarily shut almost 100 stores.
“The market has remained very volatile and competitive with consumer confidence and the clothing market continuing to fall,” said Bucher.
“The retail market is changing but this is happening faster than we or anybody expected and therefore we need to accelerate our pace of change,” he said.
Outgoing CFO Smith denied his exit showed a lack of confidence in Bucher’s plan. “I was part of developing the plan, it’s a good plan,” he said.
Bucher said progress had been made, pointing to strengthened management, sales growth from digital channels ahead of the market, encouraging returns from new store formats, and partnerships with other retailers.
“It’s not easy from the outside to appreciate the amount and magnitude of change that is happening inside Debenhams,” he said.
Debenhams made an underlying pretax profit of £42.2 million ($59.9 million) in the 26 weeks to March 3, below analysts’ average forecast of £44 million, on revenue down 1.6 percent to £1.65 billion. The interim dividend was cut by 51 percent to 0.5 pence to fund the recovery strategy.
The group is now forecasting a 2017-18 pretax profit at the lower end of analysts’ forecast range of £50-£61 million versus previous guidance of £55-£65 million. It made £95.2 million in 2016-17.
“Our biggest concern remains relevance, Debenhams has lost the customer as the product offer has become tired,” said analysts at Peel Hunt, reiterating their “sell” recommendation.
“The CFO is leaving for Selfridges, investors should follow,” they said.


Lebanon removes banking secrecy rules to fight corruption

Updated 28 May 2020

Lebanon removes banking secrecy rules to fight corruption

  • The move opens the way for investigations into bank accounts of current and former officials such as Cabinet ministers

BEIRUT: Lebanon’s parliament approved on Thursday a law to remove decades-old banking secrecy rules in order to better fight rampant corruption that has pushed the country to the edge of economic collapse.
The move opens the way for investigations into bank accounts of current and former officials such as Cabinet ministers, legislators and civil servants, state-run National News Agency reported.
The restoration of stolen public money in the corruption-plagued nation has been a key demand of protesters who have been demonstrating since mid-October against Lebanon’s ruling elite, which they blame for widespread corruption and mismanagement.
The approval of the law came two months after the Cabinet approved a draft resolution to abolish the country’s banking secrecy laws, which have turned tiny Lebanon into the region’s Switzerland, attracting clients from around the Arab world who prized the anonymity its banks offered.
The new law gives powers to National Anti-corruption Commission and a Special Investigative Committee at the central bank to investigate bank account of officials, the report said.
For Thursday’s session, Lebanese lawmakers convened inside a Beirut theater so that they could observe social distancing measures imposed during the pandemic. Dozens of anti-government demonstrators briefly clashed with riot police outside as legislators met.
As lawmakers in face masks arrived at the theater, known as the UNESCO palace, paramedics sprayed them with disinfectant before they entered, one at a time.
Lebanon has been facing its worst economic crisis in decades, with unemployment figures soaring and the local currency losing more than half of its value against the dollar.
After the banking secrecy measure was passed, Parliament Speaker Nabih Berri suspended the session until later in the afternoon when the legislators were to discuss a draft general amnesty law.
The amnesty issue has deeply divided parliamentary blocs, with Christian groups calling for pardoning Lebanese who fled to Israel after it ended its occupation of southern Lebanon in 2000, while former Prime Minister Saad Hariri and others want the release of hundreds of Islamists held as terror suspects.
Lebanon and Israel are at a state of war and some Lebanese who fled to Israel now hold Israeli citizenship. Scores of protesters demonstrated in Beirut and southern Lebanon on Thursday against pardoning those living in Israel.