Debenhams unveils turnaround strategy

Debenhams storeImage copyright
Reuters

Department store group Debenhams has announced a turnaround strategy aimed at boosting its appeal as a “destination” shop and improving its online offering.

The plan includes a review of up to 10 of its 176 UK stores for possible closure over the next five years.

A central distribution warehouse and about 10 smaller warehouses could also close.

Debenhams saw half-year pre-tax profits fall by 6.4% to £87.8m.

Its shares fell by 3.5% following the announcement.

Chief executive Sergio Bucher, who joined the company last October, said customers were changing the way they shop and Debenhams was also changing.

“We will be a destination for social shopping, with mobile the unifying platform for interacting with our customers,” said Mr Bucher who was appointed with a view to shaking up the business.

Debenhams said that leisure activities accounted for an increasing share of consumer spending and that the “leisure experience is an important part of shopping”, while “mobile interaction” was growing fast.

In an effort to capture this market, Debenhams plans to step up investment in in-store cafes, restaurants and beauty services.

‘Disappointed’

Debenhams said it had no “tail of loss-makers” in its 176 UK store estate and, in fact, many were “highly profitable”. However, it added, it wanted to “ensure they are fit for the future”.

The 10 stores under review for closure, “should they not meet our return objectives”, have not been named.

Debenhams plans to invest in its stores in major shopping destinations where there is the greatest opportunity to earn a good return. It said the rest would be “refreshed” and “remerchandised”.

The group also has 82 stores in 26 other countries. It said it would exit some “non-core” international markets, with details due to be announced in October.

Debenhams announced earlier this year that it had begun consulting on the closure of one central distribution centre in Northamptonshire which employs about 200 people. All staff are expected to be redeployed.

It is also consulting on the closure of about about 10 smaller regional warehousing facilities, connected to stores. The staff will be moved into the stores.

The retailer’s chairman, Sir Ian Cheshire, told the BBC that “this is a strategy about growth”, not job losses.

The plans should see more jobs created in the business, he said.

However, independent retail analyst Nick Bubb said he was “disappointed” that the strategy did not include any targets for sales and profits, despite the talk of growth and efficiency.

Debenhams unveils turnaround strategy

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