Debenhams closures: high street chain to shut 50 stores around UK, putting 4,000 jobs at risk

Chain hit by £491.5m losses

Debenhams is to close up to 50 shops leaving some 4,000 jobs at risk after unveiling the biggest loss in its 240-year history.

The closures will be implemented over a five-year period as the retailer seeks to slash costs associated with its nationwide network of department stores.

The group lost £491.5m in the year to 1 September – compared with a profit of £59m last year – dealing a blow to its 26,000 staff members.

The chain wrote off some £512.4m, mostly stemming from long and expensive leases for its shops, as well as IT costs and other impairment charges.

Debenhams shares plunged earlier this year when it announced it had brought in advisers to help turn its fortunes around.

Chief executive Sergio Bucher said the company’s performance reflected “a tough year for retail”.

“We are taking decisive steps to strengthen Debenhams in a market that remains volatile and challenging,” he explained.

“We are taking tough decisions on stores where financial performance is likely to deteriorate over time.”

Debenhams remains a “strong and trusted” brand with 19 million customers over the past year, Mr Bucher added.

Dave Gill, national officer at the shopworkers’ trade union Usdaw, said: “This is clearly devastating news for the staff and we are deeply concerned that the company has not said which stores they are planning to close, so uncertainty hangs over every Debenhams store and shopworker.

“We are urging the management to get round the table with us so we can work together to turn the business around.

“Crucial to the future of the company is the staff and their voice should be heard, they must also be treated with dignity and respect and that is best done through their trade union Usdaw.

“We are providing our members with the support and advice they need at this very difficult time.”

Earlier this year, Mike Ashley’s rescue of House of Fraser sparked hopes for Debenhams, when the controversial millionaire upped his stake in the latter chain to 29.7 per cent.

The Sports Direct owner’s move prompted speculation of a merger.

The store closures will bring the Debenhams estate down to about 100 locations and come on top of 10 earmarked earlier this year.

As part of the shake-up, Mr Bucher will attempt to take £130m of costs out of the business, including suspending the dividend.

Sales for the year also slipped 1.8 per cent to £2.9bn, while like-for-like revenue fell 2.3 per cent.

Despite the dire results, some analysts point to positives for the department store chain.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said Debenhams is capitalising on a growing consumer preference for experiences over material goods.

The chain has installed gyms and food outlets in a bid to make the most out of the large amount of floorspace it has.

“The retailer is also investing in improved customer service, which is vitally important, as this is something digital-only players can’t replicate,” Mr Khalaf said.

“Debenhams is also focused on its online offering, which is bearing fruit and growing strongly, albeit not enough to outweigh declines on the high street.”

Debenhams’ problems come as a raft of retailers including New Look, Carpetright and Mothercare also embark on store closure programmes.

Chancellor Philip Hammond has a chance to reduce the pain for retailers with tax changes in his Budget announcement next week.

He is rumoured to be considering giving retailers a £300m business rates cut for town centres that have been particularly badly hit by the shift to online sales.

But leading retail figures want the chancellor to do more. Last month, Tesco chief executive Dave Lewis urged ministers to implement a £1.25bn “Amazon tax” for online sales.

Mr Bucher told the BBC on Thursday: “I promise my 26,000 staff that we will try to protect as many jobs as we can. As our numbers show, we are a publicly solvent business.

“I think it’s no surprise that customers have shifted online, they buy less in store, they buy more online.

“That is the issue we are addressing with our announcement today. We want to have fewer but better stores.”

Mr Bucher declined to say which stores he planned to close.