Debenhams has announced a turnaround plan that could see up to 10 UK stores reviewed for closure and 11 warehouses close down, placing hundreds of job at risk.
The news comes as the department store released its interim half-year results for the 26 weeks to March 4, which shows an uptick in sales and like-for-likes but a drop in profits.
Chief executive Sergio Bucher, who took over the helm last October, said the “Debenhams Redesigned” turnaround strategy aimed at boosting the department store chain’s appeal as a "destination" shop and improving its online offering.
The plan includes a review of up to 10 of its 165 UK stores for possible closure over the next five years and shift around 2000 staff to customer-facing roles.
The overhaul will also see the retailer begin consultation to shut one of its three central distribution centres run by DHL, plus 10 smaller in-house warehouses.
According to Press Association, the DHL warehouse employs 220 staff and will shut in two years' time, although Debenhams hopes to be able to redeploy many staff affected by the smaller warehouse closures.
The Debenhams Redesigned strategy also see the retailer axe in-house brands, leave non-core international markets, declutter stores with 10 per cent reduction in stock options, remove barriers to online and in-store shopping, and offer customers more “experiences” as part of a drive to lure shoppers back to its stores.
“Our customers are changing the way they shop and we are changing too,” Bucher said.
“Shopping with Debenhams should be effortless, reliable and fun whichever channel our customers use.
“We will be a destination for ‘social shopping’ with mobile the unifying platform for interacting with our customers.
“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.”
Details of Bucher’s turnaround plans came as the retailer announced a 6.4 per cent drop in pre-tax profits to £87.8 million for the six months period of the interim report.
Debenhams’ overall EBITDA was also down by 2.5 per cent to £149.1 million, dragged down by a six per cent drop in the UK market EBITDA compared to the 13.1 per cent spike international EBITDA.
However, the department store chain’s overall sales was up by 2.9 per cent to £1.67 billion, with like-for-likes in the UK edging up by 0.5 per cent.
Online performance in the UK performed exceptionally well, driven by a 64 per cent surge in mobile orders.
“I’d like to thank the executive team and all our colleagues, who made sure that we were able to deliver a great experience for our customers over the peak trading period, and who are now working hard to implement our new strategy,” Bucher said.
“This will set Debenhams on course for a successful and profitable future.”