Debenhams to revamp in effort to boost growth
Shares in UK department store operator Debenhams fell more than 6pc at one stage yesterday as its new chief executive, Sergio Bucher, unveiled a strategic review aimed at returning the business to growth.
He said the chain will close up to 10 of its 176 UK stores within the next five years. He also plans to close some warehouses.
Debenhams has 11 outlets in Ireland, most of which it acquired from Roches Stores in 2006. Last year, the Irish arm of Debenhams entered examinership, arguing that high rents were making its business here unsustainable.
It exited examinership last August, saving 1,330 jobs that had been under threat.
Debenhams said yesterday that its group earnings before interest, tax, depreciation and amortisation (EBITDA) in the first half of its financial year fell 2.5pc to £149.1m (€178m). In the UK, EBITDA slumped 6pc.
It added that its business in Ireland has benefitted from last year's restructuring.
The chain aims to boost growth by becoming a destination for "social shopping", by offering new products, services and experiences.
It will also see 2,000 staff switched to customer-facing roles, and stores decluttered by reducing its range by 10pc.
"Our customers are changing the way they shop and we are changing too," insisted Mr Bucher, whose plan will also involve trialling new concepts.
"If we deliver differentiated and distinctive brands, services and experiences both online and in stores, our customers will visit us more frequently and, having simplified our operations to make us more efficient, we will be able to serve them better and make better use of our resources," he added.
But investors are concerned about how much the plans might cost. Annual capex will rise to £150m (€179m) between 2018 and 2020 from the current £130m.
There will also be exceptional costs of £50m between 2017 and 2020, of which £50m will be cash.