Debenhams to close up to 50 stores in next three to five years
Debenhams has announced that it will be closing up to 50 stores over the next three to five years as it looks to adapt to changes on the high street. The move could put around 4,000 jobs at risk.
The department store chain also reported that it made a full year loss of £491.5 million when exceptional charges relating to its Debenhams Redesigned strategy and write-downs arising from goodwill and store impairment were taken into account.
When the exceptional items were excluded, underlying pre-tax profit for the year to 1 September was £33.2 million compared to £95.2 million in the previous year.
While group like-for-like sales were down 2.3% in the period, Debenhams’ group gross transaction value fell by 1.8% to £2.9 billion. The retailer said revenue had been impacted by a volatile and highly competitive market as well as by weak consumer confidence as shoppers cut back on discretionary spend.
Sergio Bucher, Debenhams chief executive, said: “It has been a tough year for retail in 2018 and our performance reflects that. We are taking decisive steps to strengthen Debenhams in a market that remains volatile and challenging. Working with our new CFO Rachel Osborne, and the board, I am determined to maintain rigorous cost and capital discipline and to prioritise investment to achieve profitable growth. At the same time, we are taking tough decisions on stores where financial performance is likely to deteriorate over time.”
Despite the difficult trading conditions, Debenhams said it has made good progress with its Redesigned strategy, particularly in its UK food categories. It has also been working to transform its beauty offering with the aim of introducing more choice and digital innovation and is currently revitalising its fashion category by refreshing its designer portfolio and increasing the frequency of the introduction of new products.
A main element of the Redesigned strategy includes improving the in-store experience for customers. The retailer now has nine stores now trading in a new design format and service model.
Today Debenhams said it will also be increasing its closure plans from 10 to up to 50 under-performing stores over the next three to five years, which is almost a third of its store estate. It will also be developing a new lower-cost approach for around 20 stores.
Bucher said: “Debenhams remains a strong and trusted brand with 19m customers shopping with us over the past year. Our transformation strategy is gaining traction, with positive results from new product and new formats, general acclaim for our store of the future in Watford and digital growth that is outpacing the market. With a strengthened balance sheet, we will focus investment behind our strategic priorities and ensure that Debenhams has a sustainable and profitable future.”
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