(Bloomberg) -- British department-store owner Debenhams Plc cut its full-year profit forecast as sales worsened in May and June amid discounting from competitors in a tough U.K. retail climate.

The company now expects pretax profit of 35 million pounds ($46.4 million) to 40 million pounds, compared with a current market consensus of 50.3 million pounds, Debenhams said in a statement Tuesday. The move follows a series of retail insolvencies and store-closings on the U.K.’s shopping streets.

“It is well-documented that these are exceptionally difficult times in U.K. retail, and our trading performance in this quarter reflects that,” Chief Executive Officer Sergio Bucher said. “We don’t see these conditions changing in the near future.”

To strengthen its balance sheet, the company said it plans a material reduction in capital expenditure in the next fiscal year. With Debenhams’ profits stuck in a long-term decline, its shares closed at a nine-year low this month. Mike Ashley, CEO of Sports Direct International Plc, has increased his holding in the company, spurring speculation he may try to buy it outright.

Debenhams is also in talks to rent out excess space in its flagship London department store to flexible-office provider WeWork Cos. as the U.K.’s retail crisis deepens, people with knowledge of the matter said earlier this year.

To contact the reporter on this story: Thomas Buckley in London at tbuckley25@bloomberg.net

To contact the editor responsible for this story: Eric Pfanner at epfanner1@bloomberg.net

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