Discounting blow as Debenhams reports drop in profits

Debenhams, the UK’s second- largest department-store chain, became the first victim of increased holiday discounting by Britain’s retailers as it said profit will drop in the first half of the financial year.

An anticipated surge of Christmas business failed to materialise and has left Debenhams with a backlog of inventory to clear in the next two months, the company said yesterday, sending the shares down as much as 15%.

Debenhams joined other UK stores by offering discounts of as much as 50% before Christmas as shoppers delayed purchases to wait for bargains. That’s taken its toll on profitability, with first-half pretax profit expected to be about £85m (€102m), down from almost £115m a year earlier, the retailer said yesterday.