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Debenhams H1 Profit Plunges, Warns On FY18 View; CFO Matt Smith To Resign

Debenhams plc (DEB.L), a department store operator, reported Thursday that its first-half profit before tax plunged 84.6 percent to 13.5 million pounds from last year's 87.8 million pounds.

Basic earnings per share were 0.9 pence, down 84.5 percent from 5.8 pence a year ago.

Underlying profit before tax was 42.2 million pounds, compared to 87.8 million pounds last year. Underlying earnings per share were 2.8 pence, compared to 5.8 pence last year.

Group EBITDA fell 30.6 percent to 103.5 million pounds.

The company noted that a disappointing Christmas season saw an increase in competitor discounting. Group gross margin rate declined 160 basis points reflecting clearance of Gift ranges and management of seasonal stocks in reaction to this environment.

Group gross transaction value dropped 1.6 percent to 1.65 billion pounds.

Statutory revenue fell 2.4 percent to 1.319 billion pounds from 1.351 billion pounds a year ago.

Like-for-like sales declined 2.2% with constant currency LFL at 2.8%, against a challenging UK market background.

The company noted that the final trading week was disrupted by extreme weather conditions, temporarily closing almost 100 stores during New Season Spectacular. This is estimated to have reduced LFL by about 1% for the half.

Further, the Board has decided, in line with stated priorities for capital and targeted earnings cover of around 2x, that the interim dividend will be rebased to 0.50p per share.

Looking ahead, fiscal 2018 profit before tax is expected to be at the lower end of the current range of broker forecasts of 50 million pounds to 61 million pounds.

Separately, Debenhams announced that Matt Smith, CFO, has informed the board of his intention to leave the Group in order to take up the position of Finance Director at Selfridges.

A search has begun for his successor and in the meantime Smith will continue in his role to ensure an orderly handover.

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