Debenhams profits down more than 50% as it is hit by tough Christmas and extreme weather

Underlying profits before tax at department store Debenhams plunged by 51.9% to £42.2m in the half year to 3 March as it was hit by a poor performance at Christmas and unseasonably cold weather towards the end of the reporting period.

Gross transaction value edged up 1% to £1.65bn but like-for-like sales were down 2% as the business grappled with a "challenging UK market". Reported profit before tax was down 84.6% at £13.5m. "The final trading week was disrupted by extreme weather conditions, temporarily closing almost 100 stores during our New Season Spectacular. This is estimated to have reduced LFL by c.1.0% for the half," it said.

A bright spot in the numbers came from digital sales which were up 9.7% outpacing the market in general with mobile activity and conversion rates both improved. The beauty and food categories were also said to have done well.

The business is in the midst of a transformation strategy called Debenhams Redesigned, aimed at placing digital and experience at the heart of its offer, and CEO Sergio Bucher said good progress was being made with the programme.

"The UK 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. We expect no help from the external environment, so we are focused on delivering our Debenhams Redesigned strategy, aiming to mitigate difficult trading conditions through self-help initiatives," Bucher said.

"It has not been an easy first half and the extreme weather in the final week of the half had a material impact on our results. But I am hugely encouraged by the progress we are making to transform Debenhams for our customers. Our digital growth continues to outpace the market while our store in Stevenage was recently named best new store at the Retail Week Awards," he added.

Bucher said the business was "holding share in a difficult fashion market" and that new partnerships in other categories, such as furniture, had the potential to transform its offer. "We approach the remainder of the year mindful of the very challenging market conditions, but with confidence that we have a strong team and the right plan to navigate them and return Debenhams to profitable growth," he said.

The business also confirmed that Matt Smith, its CFO, is leaving the business to take up the same role at Selfridges.