Debenhams has faced another financial plunge amid what it calls a ‘volatile’ retail market backdrop.
Today, the retailer revealed plans to close 50 out of its 166 UK stores - most at risk are said to be its smallest branches.
The announcement has put 4,000 jobs at risk.
The news is the latest in a whirlwind of turbulent times for the company, despite its efforts to remain afloat.
The store closures come as Debenhams revealed record annual losses of £491.5m in the year to 1 September, against £59m profits the previous year with like-for-like sales declining 2.3%.
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Sergio Bucher, CEO of Debenhams, said: “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.”
Back in September the department store chain revealed plans to make-over its beauty sector - which contributed to digital cosmetics sales rising by 16% in the spring - with a new Beauty Hall space and online Beauty Club.
Talking to Cosmetics Business about the launch of the new concepts, Richard Cristofoli was optimistic about the changes being made.
He said: “I’m not playing it down. We are responding, it’s why we’re doing these new initiatives and we’re doing our part to modernise in the face of the competition.”
Unfit for business
But Debenhams is yet to reap the rewards of its ventures.
Despite the optimism from the retailer, Harsha Wickremasinghe, Head of Business Intelligence at Livingstone, an M&A advisory company, is not convinced Debenhams is fit to compete in the market.
He said: “The embattled retailer has outlined hard-hitting plans to transform itself into a relevant retail entity for the 21st century, but it smacks of desperation and begs the question as to why it has taken so long to address basic issues.
“The announcement highlights just how unfit for purpose the department store model is in today’s retail environment.”
Debenhams Oxford Street store
Meanwhile, Rob Cottingham, Credit Director at finance specialist Duologi, said: “The big street as we know it is shifting.
“The brands set to thrive will be those agile enough to offer consumers flexible ways to shop and pay.”
He advises retailers to explore digital ventures to ensure a lifeline.
He added: “Optimising digital processes will be a key to this. However, retailers need to get the basics right.”
Resilience will prevail
In spite of the disappointing figures, Debenhams can take away some positives from the results.
Digital growth in H2 accelerated to 16% and mobile demand grew 20% thanks to the company’s development programme, which aimed to help drive improvements in speed and filtering.
Bucher added: “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.
“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 marketing.
“With a strengthened balance sheet, we will focus investment behind our strategic priorities and ensure that Debenhams has a sustainable and profitable future.”
