Debenhams has announced that CFO Simon Herrick has resigned with immediate effect, following a major profits warning two days ago and news that the retailer faced 'a sea of red' over the key Christmas trading period.

Herrick, who has been CFO for two years, will receive a £500,000 payoff. He leaves the company on 7 February 2014 and Debenhams said Neil Kennedy, director of finance, will assume the role until a replacement has been found.

The most recent profits warning was Debenhams' second in less than a year and was accompanied by heavy discounting in its shops.

The retailer said that pre-tax profits for the first half of its financial year are now likely to be around £85m, almost 25% less than City forecasts of £110m for the six months to the end of February.

In the run-up to Christmas, Herrick wrote to suppliers demanding a one-off fee from them worth 2.5% of its outstanding payments and applying a 2.5% discount to orders agreed with suppliers. This so-called 'Santa tax' caused outrage among Debenhams' suppliers and was widely criticised.

Michael Sharp, chief executive of Debenhams, said: 'On behalf of the board, I would like to thank Simon for his hard work and contribution over the past two years. We wish him well in the future.'