Debenhams store closures – 50 shops could shut with 4,000 jobs at risk after chain announces £500m loss
Debenhams could be forced to close 50 stores over the next five years after reporting an annual loss of almost £500million
DEBENHAMS has announced the biggest loss in its 240-year history today - as well as 50 store closures.
More than 4,000 jobs will be at risk after Britain’s biggest department store chain reported a statutory annual loss of almost £500million for the year to September 1.
Charges for unwanted store leases and IT systems are blamed.
It has earmarked 50 shops — just under a third — for closure in the next three to five years if it remains loss-making, confirming reports from earlier in the week.
Around 4,000 jobs are expected to be affected. The company is expected to introduce a hiring freeze in a bid to avoid redundancies.
Debenhams' boss Sergio Bucher said he wants to have "fewer but better" stores from now on.
He told BBC Radio 4's Today programme: "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 with a better shopping experience, we want to grow our online business and we want the whole of the organisation to be more profitable.
"This is a five-year programme.
"Most of the stores that we have in this plan are still profitable, they might stop being so as online develops.
"I can promise my 26,000 staff across the UK that we will work very hard to protect as many stores and as many jobs as we can."
The reported loss today compares with a £59 million profit in 2017.
The store closures will leave Debenhams with about 100 branches left in the UK. It currently has 166 across the country and 240 worldwide.
Mr Bucher is looking to save £130million from the business, which will include freezing payments to shareholders.
Woes at Debenhams come after several high street retailers including New Look, Carpetright and Mothercare have also started closing stores.
Why is Debenhams closing its stores and which shops are shutting?
HERE'S what we know about the Debenhams store closures so far:
Why is Debenhams closing some of its stores?
It's believed to be a combination of increasing rents, business rates and the rise in online shopping.
Richard Lim of Retail Economics, told the BBC last month: "The harsh reality is that they are operating in one of the most challenging parts of retailing at the moment.
"Consumers are increasingly shopping online, and they are also spending more on things like holidays and the experience economy.
"The other part of the pincer movement Debenhams is facing is that they are being squeezed on costs, with things like increasing rents and business rates, and rising wage and utilities bills.
"It all means that department stores are incredibly expensive to operate."
Which stores are closing?
It's not yet clear which 50 stores - out of 240 - will be closing, but it would affect around 4,000 jobs.
Earlier this year, Debenhams said it planned to close ten stores - and it has also already axed around 320 jobs.
The high street has also been hit with the collapse of House of Fraser, Maplin, ToysRUs and Coast.
Robert Hayton, head of business rates at real estate advisor Altus Group, said: "Department stores are beginning to look like the dinosaurs of the high street.
"Big rents, high rate liabilities, large staffing needs, and leases that are difficult to give up all conspire to create a beast unable to adapt to a rapidly changing retail climate."
It's thought Sports Direct tycoon Mike Ashley could launch a takeover bid for Debenhams.
Rumours are swirling that the chain could merge with House of Fraser after Mr Ashley saved the business from collapse.
The mogul owns just under 30 per cent of Debenhams, close to the threshold at which he must launch an official takeover bid.
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The chain had following three profit warnings this year.
But now the embattled department store will fasttrack those plans and close a further 40 stores.
It has already closed two out of the original ten earmarked for closure in January.
Meanwhile, cake chain Patisserie Valerie will not be liquidated after the High Court dismissed a winding-up order.
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