Debenhams ‘to close 90 stores putting 10,000 jobs at risk’ as part of turnaround plan
DEBENHAMS could be set to close an additional 40 stores, according to reports.
The struggling retailer announced last year that it would be closing 50 stores of its 165 stores in the UK and Ireland over the next five years.
This initial tranche of closures was estimated to affect around 4,000 jobs, although the department store said it was hoping to minimise compulsory redundancies.
Today, said that the retailer had earmarked another 40 stores for potential closure, which could take the job loss figures to 10,000.
If the rumours are true, the closures would account for over half of the chain’s stores in the UK.
Debenhams was unable to comment on the reports, but the retailer has has previously said there are 20 further stores which are uninvestable.
These outlets are currently profitable, but Debenhams does not believe they will deliver further return on investment.
The retailer said at the time that it was looking at “alternative solutions” for those outlets.
Which shops did we lose from the high street in 2018?
A number of familiar high street names hit the rocks last year, including:
- Asda: The supermarket is to start consulting with staff over potential job losses next year which could total almost 2,500.
- Coast collapsed into administration in October 2018, putting 300 jobs at risk. Twenty-four standalone stores have been closed, while Karen Millen is understood to have bought the group’s brand and website, saving around 600 roles.
- Evans Cycles: Up to 50 per cent of its locations will also close, leading to around 650 job cuts.
- Gaucho restaurant group prepared to file for administration in July 2018 facing the loss of 1,500 jobs. The Argentinian restaurant had been in talks with potential buyers since May 2018.
- House of Fraser announced in early August that 31 of its 59 stores would be closing by January 2019. This meant 2,000 jobs were at risk – along with over 4,000 of its brands and concessions. It’s now been confirmed that Sports Direct owner Mike Ashley has bought the company.
- Ikea: The Swedish furniture store unveiled plans to cut 350 UK jobs over the next two years as part of a global transformation plan. But it will also add 500 new jobs in spring when the new Greenwich store opens.
- Laura Ashley: The retail chain is expected to close around 40 stores under its new chairman.
- New Look is looking at plans to close 60 stores in the UK, with its owners considering a possible Company Voluntary Arrangement (CVA) which will allow it to restructure its business and pay-off its debts.
- Pets At Home: The pet chain is likely to cut some jobs next year, having earmarked 30 vet practices at its stores for closure.
- Prezzo also announced plans to close 100 restaurants putting hundreds of jobs at risk.
- Toys R Us went into administration earlier this year. The company, for many years a household name in retailing, faced the loss of 3,000 jobs.
Laith Khalaf, a senior analyst at Hargreaves Lansdown said: “It’s a sad reflection of the state of the UK high street. Debenhams needs to cut its cloth to adapt to the new digital world where shoppers increasingly choose clicks over bricks.
“Christmas was poor for the retailer, and it needs to cut costs as sales dwindle.”
Richard Hyman an independent retail consultant and analyst said: “Debenhams is fighting for its life. Everything is up for grabs and if the business does manage to to survive in its current form, it’s bound to mean massive downsizing.
“Even then, it would be a huge challenge to establish a viable footing in a market getting progressively more cutthroat.”
In October, the department store reported losses of £491.5m and since last year’s annual meeting shares have fallen by 86 per cent to 4p.
In the run up to Christmas, high street stores including Debenhams were forced to slash prices by as much as 70 per cent in an attempt to drive footfall.
And Debenhams reported one of the worst Christmas results on the high street. It said that like-for-like sales in the 18 weeks to January 5 fell by 5.7 per cent.
Russ Mould, investment director at AJ Bell said: “A slumping share price means investors may not be surprised by the talk of further cost-cutting at Debenhams but it still awful news for the staff, suppliers and potentially the landlords involved.
“The company is struggling with weak sales, falling profits and the crushing burden of the leases on its shops, which are expected to cost it £4.4 billion under the agreements it currently has with landlords, over a period of 20 years and more.
“Debenhams will be looking to cut its lease bill. Closing shops is one option and it may use this drastic plan as a bargaining tool with landlords should management try to renegotiate the rent on the sites it decides to retain.”
Retail billionaire and founder of Sports Direct, Mike Ashley, has been taking a greater interest in the chain.
Last week, Ashley offered a £40million investment in the company, but was rebuffed.
Ashley then staged a boardroom coup which saw Debenham’s chief executive Sergeo Butcher and former chairman, Sir Ian Cheshire blocked from reappointment to the board.
Cheshire has since resigned as chairman but Butcher continues as CEO.
In October, the retailer said it was set to close a third of stores under emergency plan to save £100m.
Debenhams’ new store has a gin bar, as retailer tries to beat struggling high street.
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