Department store Debenhams has posted sluggish sales growth over the vital Christmas period as it posted trading results for the 17 weeks to 28 December.
Shares in the retailer have plunged by 12.2 per cent, striking £125m off its value.
Debenhams, which was founded in the eighteenth century, saw total sales growth of 0.7 per cent and its like-for-like sales inched up 0.1 per cent.
Analysts predict its pre-tax profits will be about £85m which would fall short of the retailer’s £110m pre-Christmas forecast.
The department store has ploughed £25m into the modernisation of its flagship Oxford Street and opened 37 new stores in the past seven years and asked suppliers to grant them a 2.5 per cent discount just a week before Christmas Day. Earlier this year suppliers were asked to lengthen payment terms from 90 to 120 days.
It said its better performing categories were beauty, home and gifting whilst clothing was weaker.
Neil Saunders, managing director of retail analysts Conlumino, said exceptionally poor weather and some consumer apathy had contributed to weak sales in the final weeks of the festive season.
He added: “It is likely that (Debenhams’) discounting had to go further than planned with a consequent impact on profits.”
Rival John Lewis has surged through the festive period after posting a 7.2 per cent rise in sales compared to last year. Managing Director Andy Street he was “extremely pleased” with the results and said John Lewis had outperformed the market.
The pressure has got to Simon Herrick who quit his post as Chief Financial Officer this morning after less than two years in the role. Mr Herrick, who earned £489,000 per year as CFO, will leave on 7 February. Neil Kennedy, Director of Finance, will take over the role of Acting Chief Financial Officer on an interim basis.