Business

Debenhams shares fall after sales dip, H&M profits fall

Picture of department store Image copyright Getty
Image caption Lower sales, but profits hold up

Shares in department store group Debenhams have fallen almost 6% after it posted a slight drop in sales.

Debenhams said it had seen a 0.2% fall in like-for-like sales in the 15 weeks to 11 June.

Separately, Swedish retailer H&M saw a 17% fall in second-quarter profits, hit by weak demand for its spring clothes and on its e-commerce platform.

Debenhams said that the UK trading environment was more uncertain since the start of 2016.

Debenhams said clothing sales were weaker, but that non-clothing sales such as health and beauty sales had helped support its profits.

It said that despite volatility in the trading environment, it expects 2016 profit to meet forecasts.

Analysts said that the results pointed to tough conditions on the High Street.

"Like-for-like sales in the last three months have deteriorated and gross margin guidance cannot be upheld," said Joshua Raymond, Market Analyst at XTB.com.

"That paints a difficult trading environment for the retailer and as such, investors will demand the firm keeps a tight grip on cost."

Analysts on average expect Debenhams to report pre-tax profit of £119m, according to Reuters.

Tough conditions

In May, a warning of lower profits sent shares in High Street rival M&S down by more than 10%.

Conditions for retailers are tough around the world, with H&M profits hit by markdowns due to unusually weak sales growth.

Pre-tax profit in H&M's fiscal second quarter fell to 7.0bn Swedish crowns ($850m; £577m) from 8.4bn crowns a year earlier. The result was in line with a Reuters poll of analysts.

H&M, the world's second-biggest fashion retailer after Zara owner Inditex, said higher markdowns were mainly due to spring garments not selling as well as planned because of unfavourable weather in many key markets.

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