Executive Summary

• Debenhams reported a decline of 1.6% in group transaction value to £1.7 billion and a fall of 51.9% in underlying PBT to £42.2 million. Both are broadly in line with consensus, as recorded by S&P Capital IQ.
• The retailer attributed the poor performance to Christmas trading when it increased promotional activity and markdowns to keep pace with competitor discounting.
• Debenhams lowered its guidance for a decline in FY18 gross margin to (100) bps from (25) bps. The company now guides for FY18 PBT to be at the lower end of the £50–£61 million range.