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Debenhams Third-Quarter Sales Miss Estimates on Cool Weather

Debenhams Plc (DEB), the U.K.’s second-largest department-store chain, said sales weakened in the third quarter as another period of cold weather and a tough consumer climate reduced spending on spring and summer fashions.

Sales at stores open at least a year were unchanged in the 16 weeks ended June 22, the London-based retailer said today in a statement. That missed the median estimate of 15 analysts compiled by Bloomberg for a 1.5 percent gain and was a slowdown from growth of 3.1 percent in the first half.

The weaker-than-expected performance won’t ease pressure on Chief Executive Officer Michael Sharp, who has overseen a decline of more than 20 percent in the stock value this year. The executive is modernizing stores, increasing spending on advertising and offering more discounts to lure shoppers.

“Sales were exactly flat over the period, which is disappointing and below the market’s expectation despite 40 percent online sales growth,” Nick Bubb, a retail analyst said by e-mail.

The shares fell 0.4 percent to 90.4 pence at 8:49 a.m. in London trading.

The CEO told journalists the “weather has not been helpful” and weaker consumer confidence contributed to the sales slowdown. Still, the retailer increased market share in key categories such as beauty.

In April, Debenhams blamed snow for disrupting sales earlier in the year, causing the chain to offer more discounts. This quarter the retailer “tightened up its buy” as it reacted to a softer-than-expected market to rein in costs, Sharp said.

Debenhams remains “comfortable” with the range of pretax profit estimates for the year, Sharp said in the statement. The average analyst estimate is for pretax profit of 154.3 million pounds ($236 million), according to data compiled by Bloomberg.

To contact the reporters on this story: Sarah Shannon in London at sshannon4@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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