Debenhams has today warned on profit again, as the British department store group edged nearer to a restructuring that analysts expect will include a share issue and an acceleration of its store closure plans.
Debenhams has struggled to keep pace with consumers moving online and to cheaper rivals.
Its shares fell as much as 12% after the retailer said it was no longer on track to hit previous profit guidance. The shares have lost more than 89% year-on-year.
The share price slump reflects a structural shift in British retail towards online shopping, subdued consumer spending and upheaval for department stores.
Last year, House of Fraser went bust and market leader John Lewis issued a profit warning.
Nearly 30% of Debenhams shares are owned by Mike Ashley's Sports Direct, which last year purchased House of Fraser out of administration and in January forced out Debenhams' chairman.
Last month, Debenhams got a lifeline when it secured £40m of extra funding from lenders ahead of a wider restructuring of its balance sheet.
The company said talks on the restructuring were "continuing constructively". But Debenhams also said the process was likely to be disruptive to its business in the coming months.
The retailer said this disruption, plus macroeconomic uncertainties and increased financing costs due to additional working capital needs, meant profit for its year to end-August 2019 would fall short of previous guidance.
In January, Debenhams had said it was on track to make a profit of £8.2m, down from £33.2m in 2017-18.
"Debenhams is clearly working towards a longer-term solution, which we believe will include a Company Voluntary Arrangement (CVA) and an equity fundraise," analysts at Peel Hunt said.
They added that they expected details to emerge soon and forecast a full year loss of £30m.
A CVA would allow Debenhams to accelerate store closures and cut its rent bill.
Debenhams chief executive Sergio Bucher said he still expected the restructuring process to lead to around 50 stores closing in "the medium term".
"We will need the support of both landlords and local authorities to address our rents, rates and lease commitments," he said.
The company currently trades from 165 stores in Britain.
Debenhams would need creditor and landlord approval for a CVA.
These arrangements have been adopted by other British retailers, including fashion chain New Look, floor coverings retailer Carpetright, mother-and-baby goods company Mothercare and home improvements chain Homebase.
But CVAs are no guarantee of survival. Toys r Us UK and Bhs both carried them out but still went out of business.
Debenhams is due to publish first half results next month.
Today it reported group gross transaction value (GTV) for the 26 weeks to March 2 down 5.4%, with like-for-like sales down 5.3%.
It said a programme to save £80m of costs was on track.
