Slowdown hits Debenhams profits

High street sales are falling as consumers feel the pinch

Department store chain Debenhams has reported a 16% fall in profits and halved its share dividend as trading conditions deteriorate.

Pre-tax profit before one-off items fell to £110.1m ($191.8m) for the year to 30 August, against £131.4m in 2007.

Like-for-like sales - which strip out the impact of new stores - fell 0.9%.

Chief executive Rob Templeman said: "We will remain focused on managing the business tightly in light of difficult and uncertain market conditions."

Debenhams, which runs 145 stores across the UK and Ireland, also revealed more recent evidence of the slowing economy.

In the six weeks since the end of August, like-for-like sales had fallen 4.2% - although Debenhams said it was gaining market share.

Debenhams annual profits - to the end of August - were in line with City expectations.

However, the group also announced that it was halving its share dividend for the year. Debenhams said it would pay a final dividend of 0.5 pence a share, meaning its total for the year is 3p, down from 6.3p last year.

Pre-tax profits including exceptional items were £105.9m, down from £113.2m the year before.

The group also announced a number of measures aimed at cutting its large debt burden, which currently stands at £994m. These included measures to lower costs and plans to cut investment.