DEBENHAMS, the UK's second-largest department-store chain, has said its profits will drop in the first half of the year after slow Christmas sales caused it to step up discounting.
An anticipated surge of business failed to materialise and has left Debenhams with a backlog of inventory to clear in the next two months.
First-half pre-tax profits will be about £85m (€102m), down from almost £115m a year earlier.
Debenhams' shares fell 14pc to 71.55p in early trade in London yesterday, the steepest decline since March 4.
The drop reduced the company's market value by about £142m to £878m (€1.05bn). Same-store sales in the 17 weeks ended December 28 rose 0.1pc.
"As has been widely commented on in the media, the market was highly promotional in the run-up to Christmas and we responded to these conditions to ensure our offer was competitive," chief executive officer Michael Sharp said.
"However, this extremely difficult environment has inevitably had an impact on both our sales and profitability."
Given current business conditions, Debenhams said it had decided to cease its share buy-back programme.