Debenhams chief financial officer Simon Herrick has resigned from his role after the retailer saw a disappointing sales performance over Christmas and H1 2014 profit forecasts were lowered.
Shares in the department store plunged by as much as 13% on Tuesday after it disclosed profits nearly £30m lower than last year.
The retailer said like-for-like sales grew 0.1% over the 17 weeks to 28 December. Online sales grew over the period, increasing 27% over the 17-week period, accounting for 15.6% of total sales, up from 12.4% of sales in the same period last year.
However, the income from online delivery was, it said, still lower than had been anticipated.
Debenhams now expects first half profit before tax to be in the region of £85 million, down on the £114 million recorded in the same period of last year.
“We did not experience the anticipated final surge in sales in the last week of the period and as a result we expect the need for additional markdown to clear stock in January and February. Our expectation for gross margin for the first half is a decline of between 80 and 100 basis points,” the company said in a statement.
“As has been widely commented on in the media, the market was highly promotional in the run up to Christmas and we responded to these conditions to ensure our offer was competitive. However, this extremely difficult environment has inevitably had an impact on both our sales and profitability,” said chief executive Michael Sharp.
“Looking forward, I expect conditions to remain highly competitive as we enter 2014. Everyone in the organisation is focused on improving performance and growing the business, building on the four pillars of our strategy which I remain confident will lead to success over the longer term.”
The retailer is now conducting a search to replace Herrick. Finance director Neil Kennedy will assume the role of acting chief financial officer on an interim basis.
Just before Christmas the retailer demanded that its suppliers accept a 2.5% discount on goods, with Herrick telling suppliers that it would take the discount off all outstanding payments on 17 December and a 2.5% discount on all open orders on the system on 17 December.
It said the contribution would be put towards its recently completed £25 million Oxford Street flagship revamp, as well as towards modernising 44 UK stores over the past three years, with plans to update the remaining 19 over the next two years.