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Debenhams online Christmas boost not enough to ease profit concerns

Debenhams online Christmas boost not enough to ease profit concerns

The retailer has issued a profits warning and lags behind competitor John Lewis

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Debenhams has issued a warning that its profits for the busy Christmas period will be lower than expected, despite a boost in online sales.

The department store’s head of finance, Simon Herrick, has since announced he will be stepping down. A replacement for the role has not been named.

In a trading statement Debenhams said that its online sales increased by 27 percent for the 17 weeks to 28th December and accounted for 15.6 percent of total sales, compared with 12.4 percent for the same period last year. However, it said that its “online delivery income was lower than expected”.

In comparison, John Lewis saw its online sales account for 31.8 percent of total business over Christmas and its total sales were up 7.2 percent to £734 million compared to last year.

Debenhams has said that it now expects its pre-tax profits for the six months to April 2014 to be £85 million, down from £115 million in the same period last year.

"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. However, this extremely difficult environment has inevitably had an impact on both our sales and profitability,” said Michael Sharp, Chief Executive of Debenhams.

"Looking forward, I expect conditions to remain highly competitive as we enter 2014. Everyone in the organisation is focused on improving performance and growing the business, building on the four pillars of our strategy which I remain confident will lead to success over the longer term."

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