Debenhams sees annual profits tumble by a tenth

Department store Debenhams has reported a fall in full-year profits, laying bare the challenges facing new boss Sergio Bucher.

Debenhams' new boss will update the City on his plans in the spring. Picture: Colin Hattersley

The chain said pre-tax profits fell 10.4 per cent to £101.7 million in the 52 weeks to 27 August, on group revenues 0.5 per cent lower at £2.3 billion.

Bucher, a former Amazon fashion chief, will update the market on his longer-term plans for the next phase of Debenhams’ development in the spring.

In June, the retailer warned that demand for clothes had been weak amid “uncertain trading conditions”, and analysts were relieved that the latest results were in line with market hopes.

An unchanged final dividend of 2.4p will see the full-year payout rise 0.7 per cent to 3.425p.

Hargreaves Lansdown analyst George Salmon said: “Debenhams has hit profit expectations, but life in the UK’s clothing market has been difficult. With further pressure coming from the impact of the weaker pound, it is probably only going to get tougher for retailers in the coming months.

“The group has currency hedges in place for the coming year, so won’t feel the pinch from weaker sterling just yet, but it is just a matter of time. As and when the extra costs associated with the lower pound filter through, the group says that it will seek to remain competitive on price, which could well mean a hit to margins.

“The group does at least have plenty of time to prepare and so far the group’s cost control has been good.”

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