Debenhams Slumps After Blaming Snow for Profit Shortfall

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LONDON -- The shares of Debenhams (LSE: DEB  ) have slumped 13.5% as of 9:40 a.m. EST after the department store blamed January's snow for a disappointing first-half performance.

The FTSE 250 midcap admitted that like-for-like sales between Jan. 14 and Jan. 27 dropped 10% because of the bad weather. The firm added that its efforts to recoup lost sales through Valentine's Day promotions resulted in gross margins some 20 basis points lower than those achieved last year.

Debenhams further confessed that gross margins for its current financial year were now likely to be flat, versus the firm's previous target of a 10-basis-point improvement. The chain also reckoned that profit for its first half would be about 120 million pounds, some 8 million pounds lower than the level achieved last year.

Michael Sharp, chief executive of Debenhams, said: "While the impact of the snow on the outcome for the first half is disappointing, it is now behind us and sales volumes have recovered. We are confident in our spring/summer ranges and that we can grow sales in the second half."

Prior to today, City experts had been anticipating earnings of 11 pence per share for the current year, suggesting that the shares were valued at less than 10 times profit.

Of course, whether this morning's update indicates that Debenhams is now a buy or a sell remains up to you. However, if you are looking for a somewhat more reliable opportunity, this exclusive in-depth report reviews a solid possibility within the FTSE 100. Indeed, the blue chip in question has lifted its profit by 44% since 2009 and has just been declared "The Motley Fool's Top Growth Stock For 2013." Just click here to download the report -- it's 100% free.

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Related Tickers

8/25/2016 11:09 AM
DEB $62.50 Down -0.55 -0.87%
Debenhams CAPS Rating: No stars