Canaccord less negative than RBC on Debenhams

"The volatility of earnings is high and the balance sheet is not as strong as it should be for a business with these characteristics," they said.

Earlier, the department store brand had blamed the adverse weather seen across the UK this winter for the 2.2% drop in like-for-like sales for the 26 weeks leading up to 3 March, while its profits fell 84% to £13.5m.

Nevertheless, the Canadian broker conceded that: "Debenhams has held its clothing market share in a difficult market. This suggests to us that the consumer proposition is viable. Combining this with a 7x cal. 18E PE and 7% yield keeps us at Hold."

The company's 'redesigned' strategy is having an encouraging effect on the business despite the disappointing financials, the broker argued, adding that new initiatives had improved the customer proposition and increased the business's flexibility and efficiency.

Similarly, analysts at RBC stood by their 'sector perform' recommendation on the stock, but were more cautious regarding the company's valuation.

In their opinion, Debenhams was likely to continue to be impacted by structural pressures, including competition from well-merchandised specialty and online retailers.

In a research note sent to clients, their analysts said: "We think Debenhams' results highlight the importance of having a strong online and multi-channel offer. Our preference in the sector is Next for its online growth story, helped by its fast, highly automated systems. Debenhams on the other hand has seen its range advantage eroded over time by the likes of Amazon and has been excessively promotional recently in our view."

They went on to say that, while Debenhams' valuation is low, "Debenhams has a very mixed track record, and we think some other UK stocks are better positioned right now and offer more upside."

For its sector peers on the other hand, "given current trading should now improve (Debenhams had highlighted "challenging" trading conditions with higher exceptional costs which might be seen as negative read-across for M&S, RBC said) we think this may create a buying opportunity for UK apparel stocks."

As of 1437 BST, Debenhams’ shares were down 1.80% at 22.90p.