Debenhams pretax down 16 pct, cuts dividend

Debenhams Plc, Britain's second-biggest department store chain, posted a 16 percent drop in annual profit on Tuesday, in line with expectations, and halved its dividend amid worsening trading conditions.

The group, which returned to the stock market laden with debt in 2006 after two-and-a-half years in private equity hands, said it made profit before tax and one-off items of 110.1 million pounds ($191.8 million) in the year ended Aug. 30.

Forecasts ranged from 109 million pounds to 110 million in a company poll of analysts.

Debenhams, which runs 145 stores across the UK and Ireland, proposed a final dividend of 0.5 pence a share, giving a total for the year of 3 pence, down from 6.3 pence the year before.

Like-for-like sales fell 0.9 percent and were down a further 4.2 percent in the first six weeks of the new financial year, although the group said it was gaining market share.

It also announced a series of measures aimed at accelerating the repayment of its debt, which stood at 994 million pounds at Aug. 30.

These include a target for 10 to 15 million pounds of cost savings and the reduction of capital spending to 90 million this financial year from 129.1 million last year.

Icelandic investor Baugur has a stake of about 13 percent in Debenhams, while Milestone Resources, an investment group linked to Dubai-based retailer Landmark, has 10 percent.

Debenhams shares, which returned to the stock market at 195 pence apiece, have fallen steadily to close at 32-1/2 pence on Monday, valuing the business at about 284 million pounds.