Debenhams confirms 50 stores will shut as 4,000 staff face redundancy
The future of stores in Walsall, Wolverhampton, Merry Hill and Birmingham is in doubt.
Debenhams has unveiled plans to axe up to 50 high street shops, putting around 4,000 jobs at risk, as profits plunged at the struggling department store chain.
The group said the closures will take place over a three to five-year period and the announcement comes alongside a dire set of financial figures.
Debenhams has stores in Wolverhampton, Walsall, Merry Hill, Kidderminster, Lichfield and at the Bullring in Birmingham.
The shop at Wolverhampton's Mander Centre only opened in October last year.
Wolverhampton South East MP Pat McFadden said this morning: "This is obviously concerning as Debenhams is the anchor tenant in the revamped Mander Centre.
"The investment that brought them here was very important to the city. The High St is really hurting in retail terms as we have seen from the difficulties of a number of chains. We have to hope that the Wolverhampton store will be OK.”
A spokesman for Debenhams said: “We have identified up to 50 stores, accounting for under 15 per cent of total sales, which are currently profitable, but where we do not see a long-term future and which we intend to exit over the next three to five years.
"This is an ongoing five-year programme and we are not disclosing a list of these stores.”
The firm swung to a £491.5 million loss in the year to September 1 after being stung by exceptional write-downs of £512.4 million, primarily relating to store and lease provisions, IT costs and impairment charges.
The loss compares to a £59 million profit in 2017.
Boss Sergio Bucher 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.
"We are taking tough decisions on stores where financial performance is likely to deteriorate over time."
Dividend
The store closures will bring the Debenhams estate down to about 100 and come on top of 10 earmarked earlier this year.
As part of the shake-up, Mr Bucher will look to take £130 million of costs out of the business, including suspending the dividend.
Sales for the year also slipped 1.8 per cent to £2.9 billion while like-for-like revenue fell 2.3 per cent.
Mr Bucher insisted: "Debenhams remains a strong and trusted brand with 19 million customers shopping with us over the past year.
"With a strengthened balance sheet, we will focus investment behind our strategic priorities and ensure that Debenhams has a sustainable and profitable future.
“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.”
Shares in the retailer opened down around 6% at 8p.
Another Ashley takeover?
To compound matters, Debenhams is also the subject of takeover talk, with speculation building that Mike Ashley is set to merge it with his newly-acquired House of Fraser.
The Sports Direct tycoon owns just under 30 per cent of Debenhams, close to the threshold at which he must launch an official takeover bid.
Mr Ashley promised to turn House of Fraser into the 'Harrods of the High Street' after taking over the chain, which includes Beatties in Wolverhampton, last month.
High street struggle
Woes at Debenhams come as a raft of retailers including New Look, Carpetright and Mothercare also embark on store closures programmes.
The high street has also been hit with the collapse of House of Fraser, Maplin, Toys R Us 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.”
