Debenhams Stock Sinks as Retailer Loses CFO and Warns on Profit
(Bloomberg) -- Debenhams Plc tumbled after the U.K. department-store operator said its chief financial officer is leaving to join a rival, and profit will be at the lower end of an already-reduced forecast range.
Following a holiday season in which U.K. consumers shifted to e-commerce merchants such as Amazon.com Inc. and hunted for bargains, full-year pretax profit will be at the lower end of brokers’ forecasts ranging from 50 million pounds to 61 million pounds ($71 million to $87 million), Debenhams said in a statement Thursday.
CFO Matt Smith will leave to become finance director at Selfridges & Co. another British department-store operator, Debenhams said. The shares fell as much as 13 percent, the most since early January, when the company last warned of disappointing earnings.
At that time, the London-based fixture of the U.K.’s downtown shopping districts reported weak Christmas sales. The latest warning added to the woes of British retailers, with the U.K. arm of Toys “‘R” Us Inc. and electronics seller Maplin filing for insolvency this year after the previous demise of the BHS chain.
Debenhams has struggled to build its online business, though it said Thursday that growth in digital sales of 9.7 percent in the 26 weeks through March 3 outpaced the market. Under Chief Executive Officer Sergio Bucher, it has borrowed Selfridges’ strategy of adding cafes, bars and restaurants to try to lure shoppers back in, but so far the strategy has had only limited success.
“The U.K. retail environment is undergoing profound change, and with the help of some important new senior hires, we are moving faster and working harder than ever to ensure Debenhams is well-placed to outperform in this new retail world,” Bucher said in a statement.
Debenhams dropped 7.9 percent to 21.48 pence at 9:20 a.m. in London, giving the company a market value of 263.7 million pounds.
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