Debenhams has announced it will close 50 stores after reporting a record annual loss of £491.5m in the year to 1 September.
The embattled department store said it will close almost a third of its 165 stores in the next three to five years leading to the loss of around 4,000 jobs.
The record loss comes after exceptional write-downs that totalled £512.4m attributed to store and lease provisions. Underlying profit before these write-downs was £33.2m, a 65% decrease compared with the previous year.
During the period Debenhams reported that like-for-like sales declined 2.3% with the company reporting that the UK market remained “volatile” during the second half of the year. It also said its core markets of fashion and beauty sales were “weak”.
Debenhams Sergio Bucher, CEO, 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. Working with our new CFO Rachel Osborne, and the board, I am determined to maintain rigorous cost and capital discipline and to prioritise investment to achieve profitable growth.
“At the same time, we are taking tough decisions on stores where financial performance is likely to deteriorate over time. Debenhams remains a strong and trusted brand with 19 million customers shopping with us over the past year.”
He added: “Our transformation strategy is gaining traction, with positive results from new product and new formats, general acclaim for our store of the future in Watford and digital growth that is outpacing the market. With a strengthened balance sheet, we will focus investment behind our strategic priorities and ensure that Debenhams has a sustainable and profitable future.”
Debenhams also said that in line with its plan to prioritise debt reduction and cash generation, no final dividend to shareholders would be paid.
Despite the news, Bucherer insisted that Debenhams still had a “sustainable and profitable future” and the loss was an “accounting adjustment to allow us to deal with legacy issues”. “We’re cleaning up our balance sheet to be fit for the future,” he added.