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| Debenhams shares fall after profits warning | Debenhams shares fall after profits warning |
| (about 3 hours later) | |
| Shares in department store Debenhams have fallen 14% after the firm said bad weather in January would dent its profits for the first half of 2013. | |
| The firm said trading was "severely disrupted" by the snow that fell across the UK in mid to late January. | The firm said trading was "severely disrupted" by the snow that fell across the UK in mid to late January. |
| Although like-for-like sales in the 26 weeks to 2 March rose about 3% year-on-year, there was a 10% sales fall in the period from 14 to 27 January, it added. | Although like-for-like sales in the 26 weeks to 2 March rose about 3% year-on-year, there was a 10% sales fall in the period from 14 to 27 January, it added. |
| It now thinks first-half profits will be about £120m, less than hoped. | It now thinks first-half profits will be about £120m, less than hoped. |
| "To recover sales lost due to snow, we introduced additional promotional events in February focused on Valentine's Day, half-term and the month end," the statement said. | "To recover sales lost due to snow, we introduced additional promotional events in February focused on Valentine's Day, half-term and the month end," the statement said. |
| "Although these events did drive some incremental sales, they did not fully recover those lost in January." | "Although these events did drive some incremental sales, they did not fully recover those lost in January." |
| Debenhams shares have lost 50% of their value since November last year when they were trading at about 120 pence. | |
| 'Cautious consumers' | 'Cautious consumers' |
| The statement added: "Further, the sales generated were mainly in lower margin clearance lines, which means that gross margin for the first half will be [about] 20 basis points lower than last year. | The statement added: "Further, the sales generated were mainly in lower margin clearance lines, which means that gross margin for the first half will be [about] 20 basis points lower than last year. |
| "Therefore, gross margin for the year is now more likely to be flat than the 10 basis points increase previously guided to." | "Therefore, gross margin for the year is now more likely to be flat than the 10 basis points increase previously guided to." |
| However, Debenhams said it believed that its second-half forecasts were "robust" and that sales would continue to grow as expected. | However, Debenhams said it believed that its second-half forecasts were "robust" and that sales would continue to grow as expected. |
| "Although the snow will have proved disruptive, the wider problem was that it gave already cautious consumers another excuse not to spend," said Matt Piner, research director at Conlumino. | "Although the snow will have proved disruptive, the wider problem was that it gave already cautious consumers another excuse not to spend," said Matt Piner, research director at Conlumino. |
| Mr Piner said there was "very little consumer activity by historic standards" in the second half of January because of the snow. | Mr Piner said there was "very little consumer activity by historic standards" in the second half of January because of the snow. |
| "This particularly impacted retailers like Debenhams, which rely on the buzz and excitement surrounding sales periods to generate much of their volumes." | "This particularly impacted retailers like Debenhams, which rely on the buzz and excitement surrounding sales periods to generate much of their volumes." |
| He added that retailers such as Debenhams had to strike a "hard balance". | He added that retailers such as Debenhams had to strike a "hard balance". |
| Promotional sales were a "useful tactic" to win back shoppers, but at the expense of undermining margins and eroding profitability. | Promotional sales were a "useful tactic" to win back shoppers, but at the expense of undermining margins and eroding profitability. |