Debenhams has reported a 44% decline in annual pre-tax profits as it invests heavily to grow sales in a more challenging trading environment.
The high street retailer said it made £59m in the 52 weeks to 2 September – down from £106m in its previous financial year.
It blamed the performance on the costs of its Redesign programme – aimed at making its offering more attractive and profitable in the longer term.
Its efforts include the trial of new store formats and a makeover of its online sales platform.
Debenhams said it had also endured a much tougher second half in trading terms, as shoppers’ budgets came under further pressure from inflation outpacing wage growth.
Like for like UK sales were flat on its last financial year, the company reported.
The bright spot was a 57% leap in mobile orders – with overall digital sales growing 12%.
Debenhams said the upgrade to its digital store, which had just been completed, would improve the shopping experience for customers.
Its plans for its physical store space were still evolving, the company said, as format trials in its new Stevenage and Wolverhampton stores continued though it expected to pass on “very positive” feedback to other sites.
Two stores, at Eltham in south east London and in Farnborough, were to close with a further eight under threat.
It said shutting the two sites would affect 80 jobs though it was hoped the staff could be mostly redeployed.
Like rivals across the retail sector, the company has not been immune from the effects of the weaker pound making imports more expensive – leaving it under pressure to pass rising costs on to customers.
It signalled less promotional activity though margins were down. Full price sales grew by 1.7%.
Chief executive, Sergio Bucher, said: “The environment remains uncertain and we face tough comparatives over the key Christmas weeks.
“However, we are well prepared for peak trading and the early signs from our activity to date confirm that we are moving in the right direction towards a successful and profitable future for Debenhams.”
Shares – almost 20% down in the year to date – were 0.5% higher in morning trading on Thursday.