The British High Street is firmly in the doldrums, and the latest household name to announce a spate of closures to try to recover is Debenhams. The beloved department store joins House of Fraser, WH Smith and many other high street favourites in taking action to shut down stores.
According to the press release, Debenhams is on track to make a staggering loss of £491.5million this year, compared with a loss of £59m last year. Neither is great, but this year's is particularly high because of "cash exceptional charges of £12.3m" and "non-cash exceptional write-downs of £512.4m as a result of goodwill and store impairment, lease provisions and systems write-offs."
In other words, it really hasn't been a very good year.
The original plan was to close around 10 underperforming stores, but that has been increased to up to 50 over the next 3-5 years, with plans to significantly reduce costs in another 20.
CEO Sergio Bucher says:
"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. Working with our new CFO Rachel Osborne, and the board, I am determined to maintain rigorous cost and capital discipline and to prioritise investment to achieve profitable growth. At the same time, we are taking tough decisions on stores where financial performance is likely to deteriorate over time.
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. With a strengthened balance sheet, we will focus investment behind our strategic priorities and ensure that Debenhams has a sustainable and profitable future."
It's not all doom and gloom in the report, though. Digital sales have gone up by 12% (though possibly partly because House of Fraser's competing website has gone), with mobile demand increasing by a fifth and smartphone 'conversions' (people who go on to buy something they looked at) up 17%. The existing cost-cutting plan that was in place prior to this announcement has also saved the company £12m.
There's no word yet on which Debenhams stores face the axe, but if other closure plans are anything to go by, hopefully the flagship one on Oxford Street will stick around. Christmas wouldn't be the same without its twinkly light displays. [Standard]
Main image: Cristiano Betta via Flickr CC