STORES chain Debenhams failed to impress the city, despite its promise of better interim profits.
Shares dropped 12.5% to 40.25p after its trading update yesterday, but they rallied later to recover to 41p, or an 10.87% fall.
Although like-for-like sales, excluding VAT, were 3.6% down in the 26 weeks to February 28, gross transactions were 0.3% up and overall sales, gross margin and profits rose, helped by the first Liverpool store that opened last May.
However, fears about the group’s debt pile and the possibility of a cash call to shareholders left brokers unimpressed.
“Great trading. What about the balance sheet?” asked KBC analyst John Stevenson.
And Liverpool stockbroker Panmure Gordon changed its recommendation from “hold” to “sell”, saying: “If investors could buy Debenhams' profit and loss account without its balance sheet, then the shares would trade at much higher levels.
“Unfortunately, this is not possible and the inevitability of a rights issue means we are cutting our recommendation.”
