The statement Debenhams made in January to say it was on track to deliver profits in line with last year’s expectations is “no longer valid” as the department store chain reported a drop in sales.
The group’s like-for-like sales fell by 5.3% in the 26 weeks to 2 March 2019 and its gross transaction value (GTV) saw a 5.4% decline.
In February, Debenhams confirmed it received a £40m cash injection to give it more time to secure a longer term investment and in today’s trading update (5 March) said it was in discussions with stakeholders to consider options to restructure its balance sheet and address future funding requirements. It said the process would be “disruptive” to the business in the coming months but added its £80m cost saving programme was “on track”.
The company is also reportedly looking to accelerate the closure of 20 stores to reduce its property costs. Last year, the department store issued three profit warnings and the retailer’s sales struggled over the Christmas period.
Sergio Bucher, chief executive of Debenhams, said: “We are making good progress with our stakeholder discussions to put the business on a firm footing for the future. We still expect that this process will lead to around 50 stores closing in the medium term.
“Our priority is to secure the best outcome for the business and all our stakeholders, whilst minimising the number of store closures and job losses. To do this, as we have said before, we will need the support of both landlords and local authorities to address our rents, rates and lease commitments. I would like to thank our staff – and all our stakeholders – for their continued support through this period, as we work to deliver a sustainable future for the company.”