Debenhams has announced plans to close up to 50 stores after it reported the biggest loss in its 240-year history.
The beleaguered department store said it could close up to 50 under-performing stores out of its 165-strong portfolio in the next three to five years, leading to the loss of around 4000 jobs – although that has not yet been confirmed.
It comes after the retailer today reported a statutory loss of GBP 491.5 million in its preliminary results for its financial year ending September 1.
The loss Debenhams recorded came about after three profit warnings this year and GBP 512.4 million worth of write downs relating to store and lease provisions, IT costs, and impairment charges.
The annual loss also compares to the GBP 59 million profit the department store chain made in the previous year.
“It has been a tough year for retail in 2018 and our performance reflects that,” chief executive Sergio Bucher said.“We are taking decisive steps to strengthen Debenhams in a market that remains volatile and challenging. We are taking tough decisions on stores where financial performance is likely to deteriorate over time.”
Like-for-like sales across the year fell 2.3 % year-on-year, with Debenhams noting that their core markets of fashion and beauty remained weak.
Meanwhile EBITDA fell 35.6 % in the UK, while the retailer’s overall EBITDA fell 27.5 % year-on-year to GBP 157.5 million.
Underlying profit before tax also plummeted 65.1 % year-on-year to GBP 33.2 million, before cash exceptional charges relating in part to the Debenhams Redesigned strategy.
Debenhams also announced actions to generate cash and reduce debt, to be achieved through accelerating a cost reduction programme to target around GBP 130 million cash savings over three years, focusing on investing in priority elements of the Debenhams Redesigned strategy, and a suspension of dividend payments.
“With a strengthened balance sheet, we will focus investment behind our strategic priorities and ensure that Debenhams has a sustainable and profitable future,” Bucher said.
Debenhams’ preliminary results come after a turbulent year for British department stores, with its two main competitors House of Fraser and John Lewis also reporting financial struggles.