Debenhams could go into red after fresh profit alert

Ailing Debenhams on Tuesday admitted it won’t make as much profit as it said it would just two months ago, casting fresh doubt over its turnaround prospects.

The department store chain warned its guidance from January that it was on track to deliver profits for the year of around £8 million “is no longer valid”.

It is Debenhams’ fourth profit warning in just over a year and means the company could now even plunge into the red.

The retailer added that its same-store sales were down 5.3% for the 26 weeks to March 2.

Debenhams secured a £40 million lifeline in February, which bought it some time to renegotiate its debt with lenders. It said today those talks “have now progressed” and expects a decision by the end of the second quarter.

Chief executive Sergio Bucher, who is no longer on the board after Sports Direct tycoon and Debenhams shareholder Mike Ashley orchestrated a coup in January, said he will close around 50 stores, as planned, in the next few years.

Retail analyst Nick Bubb said: “There is no mention of the rumoured company voluntary arrangement plan, but Bucher makes a point of repeating his claim that the struggling business needs support from landlords.”

Bucher added it was on track to make £80 million cost savings this year.

Ashley, who owns 29.7% of Debenhams, went to war in December with the retailer after it refused a £40 million loan from him. The billionaire emailed Bucher with dire warnings about the chain’s future and offered financial aid. Debenhams rejected Ashley’s offer as it came “with conditions that could affect the interests of other shareholders”.

The shares fell 8% to below 3p.