British retailer Debenhams warns on profit after January snow

Debenhams, Britain's second biggest department store group, said trading in January was "severely disrupted" by the snow which fell across the country, hitting first-half profit.

The firm said on Monday it now expected pretax profit for the 26 weeks to March 2 to be around £120 million.

That compares to analysts' consensus expectations of about £130m.

Debenhams, which trails market leader John Lewis by annual sales, said that while sales at stores open over a year grew by about 3 per cent in the 26 weeks, during the snow-affected period of January 14-27 UK like-for-like sales were down around 10 per cent.

In an attempt to recover lost sales the firm introduced additional promotional events in February, focused on Valentine's Day, the school half-term holiday and the month end.

It said these drove some incremental sales but did not fully recover those lost to the snow and also came at a cost to profit margins.

Debenhams said gross margin for the first half will be about 20 basis points lower than last year, while for the full-year gross margin was more likely to be flat, rather than the 10 basis points increase previously guided to.

The firm maintained its sales forecasts for the second half as well as full year guidance on costs, capex, dividends and its share buyback programme.

"Whilst the impact of the snow on the outcome for the first half is disappointing, it is now behind us and sales volumes have recovered," said Debenhams chief executive Michael Sharp.

"We are confident in our spring/summer ranges and that we can grow sales in the second half."

Shares in Debenhams, up 28 per cent over the last year, closed Friday at 94.6 pence, valuing the business at £1.19 billion.

* Reuters