Debenhams chairman out, CEO off board after trading update

Debenhams shares plunge

Debenhams said the results are down to tough trading conditions in the United Kingdom, but said it still expects to deliver current year profits in line with market expectations. The stalwart of British shopping districts, which has struggled to keep pace with Amazon.com Inc. and other online retailers, said discounting will likely hurt its gross margin in the first half, following three profit warnings previous year.

In a highly unusual move, the company said it had asked Bucher to remain as CEO and report to the board because they believed in his strategy.

Debenhams chairman Sir Ian Cheshire has stepped down after another plunge in sales left the department store chain fighting for its survival.

For the 18 weeks, group gross transaction value declined 5.6 percent, with like-for-like sales down 5.7 percent.

Debenhams further said that the United Kingdom trading environment has continued to be volatile, as expected, with clear evidence that customers have been seeking out promotions.

Two major shareholders voted against the reappointments: Ashley, the CEO of Sports Direct International Plc, who holds a roughly 29 percent stake; and Landmark Group Inc., a retail and hospitality company based in Dubai, which owns 7 percent.

A total of 56% of shares voted were against the re-election of both directors.

However, Sir Ian had "concluded it is no longer possible for him to remain chairman of Debenhams", it said.

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"As a result, the board and Sergio have agreed that he should continue as CEO of Debenhams, reporting to the board".

The coup led by Ashley, the controversial founder of the U.K.'s largest sporting goods chain, stirred speculation he may look to combine Debenhams with House of Fraser, another struggling retailer he rescued a year ago.

"The board is mindful of its responsibilities to all shareholders and has full confidence in Sergio and in the management's plan to reshape the business".

He said: "I recognise that individual shareholders have wished to register their dissatisfaction".

The news came after the struggling department store yesterday unveiled declining sales over Christmas, but said it was still on track to deliver on profit expectations. I am looking forward to working with Sergio.

Last month Mr Ashley made public details of a £40 million loan he offered to Debenhams, but which the firm rejected.

Earlier on Thursday Mr Bucher said there had been fewer customers visiting the company's stores.

Debenhams said it had started talks with its bankers about refinancing.

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