25 Oct 2018
Debenhams announces 50 store closures, risking 5000 jobs
After posting record annual losses, Debenhams has announced the closure of 50 stores, nearly a third of their UK-wide locations, putting 5,000 jobs at risk.
The department store group reported an annual loss of approximately £500 million, against last year’s profit of £59 million.
Debenhams currently has 165 branches, of which they had planned to close 10 initially, and employs 27,000 people.
However, chief executive of Debenhams, Sergio Bucher, said they had to take tough decisions with the stores where they expect financial performance to deteriorate.
“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.”
At the moment the company has not released a list of stores that could possibly shut down. The closures are expected to take place over a period of three to five years.
Over the next year Debenhams plans of halving its capital expenditure, from this year’s amount to £70 million and focus investment on their top 100 outlets, while creating a “low cost approach” for 20 other stores.
The company also axed a final dividend pay-out to shareholders, saying that they will prioritise debt reduction and cash generation.
Share price for the group has dropped by 75% over the past year, with the entire business now being valued at £105 million. Investors fear that it could follow a similar path as that of their rival House of Fraser, into administration.
Bucher commented that Debenhams has a “sustainable and profitable future.”
“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.”