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Debenhams makes record annual loss and plans up to 50 store closures

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Reuters

Debenhams has posted record annual losses and said it will close up to 50 stores, putting 4,000 jobs at risk.

In the year to September the department store group lost £491.5m, against profits of £59m the year before.

Debenhams, which has 166 branches, previously said it planned to close 10 stores.

Boss Sergio Bucher said the company was “taking tough decisions” on stores where financial performance was likely to deteriorate over time.

The retailer is not releasing a list of the stores at risk of closure.

Mr Bucher said the additional 40 stores earmarked for closure were “currently contributing positively” to the business, but added: “However, rolling forward current trends, we do not believe they will remain profitable in future years and therefore we intend to exit these stores over the next 3-5 years”.

The BBC understands about 4,000 jobs could be affected by the changes, but Debenhams said it hoped there would be a “minimum” of compulsory redundancies and that some of the departures would be people who would have left the business anyway.

Debenhams has been undergoing a revamp aimed at reviving its fortunes, redesigning stores and introducing new “experiences” including beauty treatments and Prosecco bars.

Mr Bucher said it had identified a “profitable core of up to 100 stores in flagship and vibrant markets” where it could see a positive return on future investment.

These stores account for more than 80% of the chain’s profits.

Richard Lim, chief executive of Retail Economics, said Debenhams was operating in the part of the market under the most intense amount of pressure.

“Put simply, department stores are incredibly expensive to run,” he said. “The combination of too much space, inflexible leases and spiralling operating costs are set against a backdrop an accelerating behavioural shift towards online and experiences. This is eroding their profitability and changes in the business need to occur at a pace if they are to survive.”



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