UK Retailer Debenhams Reports 1H Profits Rise

LONDON (AP) — British retailer Debenhams PLC said Tuesday that first half profit was better than a year ago despite weaker sales, but investors sent the company's shares down sharply due to the lack of news on efforts to raise new cash and cut debt.

In a trading update, Debenhams said comparable sales excluding sales tax in the 26 weeks to Feb. 28 were 3.6 percent lower than last year. However, both margins and profits increased and net debt decreased, the company said, without disclosing any figures.

Debenhams also announced it would open eight new stores in the next 18 months, raising its estate to 161 outlets.

Shares dropped 10.9 percent to close at 41 pence on the London Stock Exchange. They had been recovering from a low of 22.75 pence on Dec. 10.

The company had nothing to say about news reports that it had been unable to negotiate a deal with its lenders to write off some of its debt as a prelude to a rights issue.

"The company still has debt of over 900 million pounds ($1.27 billion) and this morning it has been confirmed that the company has shelved plans for a rights issue after it had failed to secure a deal with the shareholders and the banks. We reiterate our sell recommendation on the stock," said Freddie George, analyst at Seymour Pierce Ltd.