Debenhams (LON: DEB) has reported an 85 percent slump in pre-tax profits after bad weather and heavy restructuring.
The department store group said that UK sales slid by 4.1 percent during the “beast from the east”, forcing the closure of almost 100 stores.
Pre-tax profits for the 26 weeks to 3 March plummeted down to £13.5 million compared to £87.8 million in the same period in 2017.
The fall in in-store sales accounted for one percent fall in underlying sales. Online sales grew 9.7 percent.
The share price for Debenhams plummeted almost ten percent in early trading but recovered by late morning.
“A combination of a disappointing Christmas and structural change in the market means it has not been an easy half year,” said Sergio Bucher, the Debenhams chief executive.
“The UK retail environment is undergoing a profound change … We expect no help from the external environment, so we are focused on delivering our Debenhams redesigned strategy, aiming to mitigate difficult trading conditions through self‐help initiatives,” he added.
Bucher added that the government should be responsible for helping high streets during troubling times.
“Paying taxes is something we all should be proud of as we all deserve great healthcare … [but] the government is responsible to make sure we have an even playing field. Right now business rates give an unfair advantage to online pure-play competitors and that needs to be addressed,” he said.
The high street is facing a tough time, with large-scale closers announced by Carpetright and New Look. In addition, Toys R Us and Maplin collapsed earlier this year.
Debenhams’ chief financial officer, Matt Smith, is leaving the group and will take a similar role at Selfridges after three years at the group.
The group has also made plans to reduce space in 30 stores, as customers are preferring to shop online. It identified eight stores that may close. Two shut down last year.