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Debenhams CFO Quits After Profits Warning
[January 04, 2014]

Debenhams CFO Quits After Profits Warning

(Sky News (UK) Via Acquire Media NewsEdge) Simon Herrick had already been under pressure, according to media reports, after he asked suppliers for a discount on goods just eight days before Christmas in what was seen as a 'Santa tax'.

The department store chain denied at the time of his letter to suppliers that it was an attempt to boost fragile festive trading.

In the letter he wrote: "As we will mutually benefit from the growth of Debenhams we are now seeking a contribution from our suppliers to support our commitment to on-going investment." He said this would include: "A single-sum contribution on all outstanding payments on your account at close December 17.

"An additional discount of 2.5% applied to all open orders on our system at close on December 17.

"This is a contribution and not a permanent amendment to your trading terms with Debenhams," the letter said.

The company, which lowered its profit outlook on Tuesday after the hoped-for surge in last-minute Christmas shopping failed to materialise, said a search to find a replacement for Mr Herrick was under way.

Neil Kennedy, director of finance, has assumed the role of acting chief financial officer on an interim basis, Debenhams said.

The chain blamed its poor Christmas performance on the continuing decline of the high street, the impact of the recession on household incomes and bad weather.

The retailer said it was planning to slash prices in January and February.

Michael Sharp, chief executive of Debenhams, said on Tuesday: "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." The announcement, which had been due on January 17, saw the retailer reveal an £85m profit for the 17 weeks to December 28 – some way off the £114.7m in the same period last year, a 26% drop.

The company's statement showed that online sales had increased by 27% during that time and accounted for 15.6% of total sales, compared to 12.4% for the same period last year.

Its share price has tumbled by 20% over the past month.

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(c) Sky News 2014

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