Annual profits at Debenhams fell more than 20%, reflecting lower sales during last year’s warm winter.
Britain’s No 2 department store chain said it was cautious about the future, with consumer spending power remaining under pressure.
Debenhams’ results for the 12 months ending in August were hit by a poor start, when warm weather dented sales in the run-up to last Christmas.
Its performance improved in the second half, helped by its strategy of cutting back on promotions and targeting more full-price sales.
Gross transaction value for the group was up 1.7% to £2.8 billion, giving a turnover up 1.3% at £2.3bn.
Underlying profit before tax was down 20.6% at £110.3m, and reported profit before tax was reduced by 23.9% to £105.8m.
Online sales increased 17.6% to £430.7m, accounting for 15.3% of the total. This was up from 13.2% in the previous year.
Chief executive Michael Sharp said the first half of the year was challenging. Trading was improving, although consumers’ disposable income was still under pressure.
“After the challenges we faced in the first half, everyone in the business has been focused on addressing the issues we identified and on delivering on the priorities we set out in April to deliver long-term sustainable growth,” he stated.
“Our performance in the second half reflects this, with operating profit up on the previous year.”
He continued: “Customers tell us that although they are encouraged by economic improvements, this has yet to translate into higher disposable income, and the market remains tough.”
The value of Debenhams shares have fallen more than 20% this year, coming after a profit warning and heavy discounting to shift stock.
As part of a turnaround plan, Mr Sharp has been cutting costs and introducing new concessions in Debenhams stores, including Sports Direct, Costa, and Mothercare.
Sports Direct owner Mike Ashley has built an 11% interest in the chain.
Debenhams operates from 28 countries and is available online in many more countries.
The company’s focus this year is to continue a strategy of building a leading international, multi-channel brand. It aims to increase availability and choice through store and online sales, and saw a 15% rise in visits to Debenhams.com.
Four new stores were opened in the UK, giving a total portfolio of 160.
Internationally, the chain has 68 franchise stores in 25 countries.
Shares in Debenhams closed up 0.96% at 63.4p yesterday.