Written by: Keith Tully
Published: 25th October 2018
The 240-year-old department store chain Debenhams has said it will close up to 50 stores within its UK portfolio over the course of the next three to five years.
Debenhams’ decision on its store closures puts up to 5,000 jobs at risk and was announced after the business revealed losses for its most recent full financial year worth close to £500 million.
Rising costs and stiffening competition within the retail sector are said to have combined to push a significant number of Debenhams stores towards and into the position of being unprofitable.
The business faces a fundamental challenge in that a growing proportion of clothing and accessory purchases are now being conducted entirely online by consumers across the UK.
The trend towards online shopping has already had a huge impact on the British high street and contributed significantly to deteriorating financial performance among all manner of retailers.
The 50 Debenhams stores earmarked for closure amount to roughly a third of the company’s total estate, with the business currently employing in the region of 27,000 people across the country.
Sales were down 1.8 per cent across Debenhams’ businesses during the most recent full year but a variety of cost issues saw the company post losses worth a total of £491.5 million for that same period.
“It has been a tough year for retail in 2018 and our performance reflects that,” said Sergio Butcher, Debenhams’ chief executive, in a statement.
“We are taking decisive steps to strengthen Debenhams in a market that remains volatile and challenging.”
In reference to the planned store closures, Mr Butcher said his team was taking “tough decisions on stores where financial performance is likely to deteriorate over time”.
Debenhams, whose shares are publicly traded, has been obliged to issue three profit warnings over the course of 2018 and its share price has plunged by around 75 per cent during the past year.
There are concerns in some quarters that the business might soon fall into administration as its great department store rival House of Fraser did over the summer.
House of Fraser was bought out of administration in August by the high street retail business Sports Direct, which also has a significant shareholding in Debenhams.