Debenhams full-year profit nudges up

Department store chain Debenhams posted a small increase in underlying full-year pre-tax profit on Thursday, but reported profit fell and the company said the trading environment in the second half was more challenging.

Underlying pre-tax profit nudged up 0.5% to £114.1m but reported pre-tax profit was down 10.4% to £101.7m. Revenue edged up to £2.34bn from £2.32bn and Debenhams proposed a final dividend of 2.4p per share, taking the full-year dividend to 3.425p from 3.4p the year before.

Numis had expected Debenhams to report a drop in underlying full-year pre-tax profit to £112.7m from £113.5m amid challenging market conditions.

The company said that as at 3 September, it had a pension deficit of £4.1m compared to a surplus of £26.2m at the end of August 2015. The deficit was driven by the reduction in bond yields, which increases the pension liabilities, partly offset by the growth in the pension asset values.

Chairman Ian Cheshire said: “We have delivered profits in line with market expectations, reflecting a strong performance over peak followed by a tougher second half trading environment. Our strategy to rebalance the business towards non-clothing has supported our performance, with strong progress in Beauty, Gifting and Food.

"Our diversified business model together with good cash generation and reducing debt means that Debenhams is in good shape to withstand a market background that remains uncertain. Our executive team, supported by all our colleagues, are actively managing the business to increase its resilience and flexibility, which will stand us in good stead to deliver long term sustainable growth. Following the arrival this month of our new CEO, Sergio Bucher, we look forward to updating the market in Spring 2017 on our longer term plans for the next phase of Debenhams' development."

At 0826 BST, Debenhams shares were up 3.9% at 55.81p.