Debenhams stock fell nearly 11% leaving the once mighty company valued at just £215m
Debenhams shares crashed to an all-time low last night after it issued its third profit warning in six months.
On another grim day for the department store chain, the stock fell nearly 11 per cent, or 2.1p, to 17.5p, leaving the once mighty company valued at just £215million.
Debenhams said it expects profits for the year to come in at around £35million to £40million compared with the £50million pencilled in by analysts.
The company made profits of £150million five years ago.
Experts said the warning exposed Debenhams’s vulnerability to the problems plaguing the High Street.
Earlier this month, House of Fraser revealed plans to close more than half of its 59 stores, while Marks & Spencer, Mothercare and New Look all shut shops.
Debenhams said earnings were hit after it was forced to enter into a price war with rivals such as House of Fraser, which recently launched 60 per cent price cuts across ranges.
The department store chain is planning to get rid of its Danish business Magasin du Nord and a small printing operation called Magenta Print to bolster its balance sheet.
Neil Wilson, analyst at online trading platform Markets, warned that Debenhams’s poor performance meant shareholders were likely to miss out on a dividend payment this year.
And Nicholas Hyett, equity analyst at Hargreaves Lansdown, added: ‘These numbers will be all too familiar to long suffering Debenhams shareholders.
‘In 2013 Debenhams was posting pre-tax profits of over £150million a year, but half a decade of falling sales and heavy discounting has trashed margins and left the group struggling to make ends meet.’
Chief executive Sergio Bucher insisted investors would start to see its strategy bear fruit from the start of its next financial year in September.
Debenhams has been investing in its beauty business, refurbishing its shops and letting space out to restaurants and gyms in stores.
In the update, Debenhams reported a 2.1 per cent boost to sales in the 41 weeks to June 16. Online sales boosted the store – they were up 11.5 per cent during the period.