Debenhams disaster! £500m loss puts high street icon on brink

DEBENHAMS will today unveil one of the biggest losses in the history of the high street as it battles for survival.

In a sign of the crisis facing traditional retailers across the country, the department store is expected to post a loss of almost £500 million.

The shortfall is the biggest in its 240year history and one of the largest ever by a major retailer in the UK. Last year Debenhams made profits of £59 million.

The company, which traces its roots back to 1778, is also set to announce the closure of a third of its 166 stores with the loss of about 4,000 jobs over the next five years.

The devastating figures pile pressure on Chancellor Philip Hammond to take action in the Budget on Monday to breathe life back into the struggling high street amid an onslaught from online rivals.

Debenhams, which has 26,000 staff, has seen its stock market value slump from £1.5 billion to just £105 million in the past six years amid mounting con- cerns over its future. Critics say it has failed to keep up with changing tastes and a shift toward online shopping. But like other high street stores, it has also suffered from crippling business rates.

Last year Debenhams paid £80 million in business rates compared with £14 million paid by online giant Amazon on its 14 vast warehouses in England and Wales.

Mr Hammond has come under heavy pressure to take action in the Budget amid a Daily Mail campaign for a complete overhaul of business rates.

More than 50,000 retail jobs have already been lost this year as consumers shun the high street to buy online from foreign tech giants such as Amazon. Toys R Us, Poundworld and Maplin have all gone bust in 2018, while other retailers such as Marks and Spencer, New Look and Mothercare have closed stores.

The average department store pays £717,952 in business rates a year, as well as battling rising wage costs, tight margins and a dropoff in visitor numbers.

Since 2010, more than a quarter of department stores in England and Wales have either been demolished or converted into other types of use, according to an analysis of official Whitehall data by real estate adviser Altus Group.

Labour MP Peter Kyle, a member of the business select committee, said: ‘The high street is under attack and it has been for a while.

‘It’s not just going to fix itself. It needs Government action – not just tinkering around the edges, but a senior minister or the Prime Minister to roll up their sleeves and figure out how we can breathe new life into Britain’s high street.

‘Once our high streets are gone, there’s no coming back.’ Robert Hayton, head of UK business rates at Altus Group, said: ‘While business rates are rarely the sole reason for store closures, they certainly are a contributory factor, being one of the least negotiable taxes.

‘In certain areas, with unique challenges, or where there is a loss of a major store, it may require councils taking a cut in business rates from businesses that they believe will help become or continue to be destinations.

‘While that might mean a reduction in their rates pot today, longer term, it will deliver far greater economic and social benefits.’

The dismal figures come amid speculation that Sports Direct tycoon Mike Ashley, who already owns nearly 30 per cent of Debenhams, may be seeking to buy the chain on the cheap.

Mr Ashley, who also owns Newcastle United Football Club, bought House of Fraser for £90 million earlier this year, just an hour after it crashed into administration. The controversial deal meant Mr Ashley was not required to pay back any of House of Fraser’s debts, leaving hundreds of suppliers millions of pounds out of pocket.

Debenhams chief executive Sergio Bucher, a former Amazon executive, has been fighting to turn around the business since he joined in 2016.

He has rebranded the store’s logo and invested heavily in its beauty division to draw in younger shoppers.

He has also brought in gin and tonic bars, make-up tutorials and X Factor-style auditions to recruit new staff in a desperate attempt to revive its fortunes.

Earlier this month Mr Bucher criticised business rates and soaring rents for its financial troubles, saying: ‘After our people, property is our biggest cost. And, right now, it is our biggest challenge.’

Debenhams declined to comment last night.

‘Economic and social benefits’