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LONDON – This week has brought further bad news for struggling UK retailers, with profits plummeting at department store Debenhams, banks withdrawing supplier protection for New Look and Mothercare’s chair exiting the struggling business.

At Debenhams, a further plunge in profits and sales has been recorded after cold weather in late February temporarily closed 100 stores in the UK. Like-for-like sales fell by 2.2 per cent in the 26 weeks to 3 March, while profits tanked by 84 per cent to £13.5m. Accordingly, lower expections for annual profits have neen announced.

Debenhams said full year profits would be at the lower end of industry forecasts of £50m to £61m, compared to £95.2m in the previous 12 months.

Chief executive Sergio Bucher said it had “not been an easy first half.”
Meanwhile, New Look said it retains confidence in its supply model after it emerged via Drapers that credit protection had been cut for some of its suppliers. HSBC has pulled credit protection from a small number of suppliers for the high street chain after a decision by New Look’s creditors to approve a credit voluntary arrangement (CVA) last month.

The changes mean New Look suppliers cannot take out insurance to ensure they are paid if the the chain collapses.

Editor’s comment: Things are tough for apparel retailers now and the bad news is, there is no light at the end of the tunnel. Amazon has only just begun stratching the surface of the apparel space, and once it gets into its stride, we expect it to make serious inroads. There will be collatoral damage along the way.

Throw in the likes of Missguided, Boohoo and PrettyLittleThing who are collectively tearing up the time to market rulebook in the fashion world, and you have the most challenging trading conditions for a generation.

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