Debenhams to close 50 stores as it posts record £500m loss
Struggling department store blames performance on tough year for retail
A Debenhams department store in Watford, England. The company has 11 stores in Ireland. Photograph: Peter Nicholls/Reuters
Struggling department store chain Debenhams is closing 50 of its underperforming stores, putting about 4,000 jobs at risk, as write-downs in the value of its business led to a record full-year loss of nearly £500 million (€565 million).
Chief executive Sergio Bucher said he was “taking decisive steps to strengthen Debenhams” in a challenging market. “We are taking tough decisions on stores where financial performance is likely to deteriorate over time,” he said on Thursday.
Mr Bucher, a former Amazon executive, is trying to keep Debenhams relevant to shoppers who are increasingly buying online and spending less on clothes. The cuts are deeper than Bucher’s original plan to close 10 stores, downsize others and renegotiate leases and rents on its estate.
The company has 11 stores in Ireland.
Last month, Debenhams denied it was actively planning a major cull of its 166-store estate. “We want to have fewer but better stores, with a better shopping experience,” he told BBC radio. “We want to grow our online business and we want the whole of the organisation to be more profitable.”
Debenhams shares were down 2.4 per cent at 8.3 pence in early trading.
The retailer, which has issued three profit warnings this year, took exceptional charges of £512.4 million relating to leases and goodwill, leading to a statutory loss of £491.5 million, the biggest in its 240-year history.
Underlying pre-tax profit for the year to September 1st slumped 65 per cent to £33.2 million, a result that Mr Bucher said reflected “a tough year for retail”.
Debenhams is not the only retailer that has suffered on Britain’s high street. BHS went bust in 2016, House of Fraser was bought out of administration in August by Mike Ashley’s Sports Direct and even market leader John Lewis has warned on profit.
Sports Direct owns just under 30 per cent of Debenhams but has ruled out a bid.
Mr Bucher told BBC radio that the number of jobs losses from the store closures over the next three-to-five years had not been quantified. – Reuters