As prof its plunge 85%, could Debenhams be the next giant to fall?
DEBENHAMS yesterday became the latest High Street name to be thrown into crisis after revealing plunging sales and profits.
Analysts fear the 240-year-old department store chain could be the next victim of a slowdown which has already claimed Toys ’R’ Us and Maplin this year.
Others such as New Look and Carpetright have been taken to the brink while BHS disappeared in 2016.
Profits at Debenhams fell 85 per cent to £13.5million in the 26 weeks to March 3, with sales slumping 2.8 per cent. Russ Mould, a director at investment firm AJ Bell, said the results could spell the end for the traditional department store. He said: ‘This drop in profit will only add to a grim sequence of declines which makes it clear that Debenhams is in a very weak position.
‘Commentators have suggested we’re close to the death of the department store model for some time and these figures add fuel to the fire.’
Sergio Bucher, chief executive of Debenhams, blamed the poor sales on a ‘profound change’ in shopping habits as well as bad weather, with the ‘Beast from the East’ forcing the temporary closure of around 100 stores. But he also admitted the chain’s products were ‘not good enough’ and its fashions had fallen behind rivals.
In a desperate bid to increase sales Debenhams is opening outlets of Nando’s inside stores.
It will also cut the size of at least 30 stores, revive its clothing and homeware ranges with more ‘daring’ designs and revamp tired stores by fitting them out with restaurants, hair and nail bars and travel agent concessions. As part of its turnaround plan Debenhams is hoping a new range by British fashion designer Richard Quinn will help create a buzz around its womenswear collection. The Queen was pictured at Quinn’s show at London Fashion Week earlier this year.
It also unveiled its latest collaboration with Preen which includes a silk shirt dress for £200. Mr Bucher said: ‘We have 19million customers with a good distribution across ages. We’re not planning on changing our customers, we just want them to visit us more frequently.’
Yesterday Mothercare, another store in crisis after a series of profit warnings, brought in a new chairman as it struggles against cheaper online retailers, while House of Fraser called in accountants to restructure its business.
The Office for National Statistics revealed retail sales suffered their worst three months in a year from January to March. Sales volumes fell 1.2 per cent in March which experts said was further evidence the High Street is ‘in serious trouble’.
‘Death of the department store’