Department store chain Debenhams posted a 21 per cent slump in annual profit, as expected, mainly reflecting a disastrous first half when warm autumn and winter weather dented sales in the run-up to last Christmas.

The company, which has 240 stores in 28 countries, on Thursday reported underlying pretax profit of £110.3 million in the 12 months ended August 30th, in line with analysts’ average forecast of £110 million, according to Reuters data.

Debenhams said on Thursday its performance had improved in the second half of the year but it remained cautious about the outlook as consumers were still not seeing a rise in their disposable incomes.

"Whilst this has been a challenging year for Debenhams, the brand is strong and our improved second half performance gives us confidence that we are ready for the key Christmas period and can deliver sustainable growth over the longer term," chief executive Michael Sharp said in a statement.