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Debenhams issues profits warning after poor Christmas trading
SHARES in Debenhams have fallen sharply after the department store warned of poor sales during the key Christmas period.
The retailer said that high levels of discounting on the high street and a disappointing final week of sales in the run-up to Christmas means that profits will be far lower than expected.
It said that it now expects its pre-tax profits for the six months to April 2014 to be £85m, down from £115m in the same period this year.
Debenhams was due to release its trading statement on January 17, but updated the market early. Analysts had been expecting pre-tax profits of £110m for the period.
Shares plunged 10.5 per cent to 74.4p on the trading statement, hitting a new low for the year.
Michael Sharp, the chief executive of Debenhams, said: "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."
The company has been upgrading and modernising stores in recent years, as well as opening new ones. It has spent £25m on refurbishing its flagship store in central London.
It plans to open a further 14 stores in the next four years, however the company is understood to have cooled interest in opening a Darlington branch.
Last year, Britain's second largest department store retailer by sales confirmed that Darlington was among 17 towns where it planned to open stores by 2016.
It has been linked with a move to convert the Crown Street offices of The Northern Echo and its sister publications into a department store.
But a spokesman for the firm said in October that there were no immediate plans to move into the town.
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