Debenhams sees high-street sales tumble
Debenhams has unveiled a slump in underlying profits on the back of weaker footfall as the retailer confirmed plans for up to 22 store closures.
In a market update the embattled department store reported that group underlying earnings declined by 36.3 per cent to £65.9 million in the 26 weeks to 2 March.
Like-for-like digital sales grew by 2.5 per cent but this was not enough to offset the drop in bricks-and-mortar revenues, with sales at UK outlets sliding 7.4 per cent due to “weak industry footfall”.
Debenhams also used the update to confirm plans to close up to 22 stores, including one in Kirkcaldy, under a company voluntary arrangement (CVA). The move puts around 1,200 jobs at risk in total.
The retailer, which recorded net debt of £417.4m as at 2 March, went into a pre-pack administration earlier this month, wiping out the stakes of all shareholders, including Sports Direct’s Mike Ashley.
Creditors including landlords will have the opportunity to vote on the CVA in a process overseen by advisers at KPMG.
Terry Duddy, executive chairman of Debenhams, said: “The issues facing the UK high street are very well known.
“Debenhams has a clear strategy and a bright future, but in order for the business to prosper, we need to restructure the group’s store portfolio and its balance sheet, which are not appropriate for today’s much-changed retail environment.
“Our priority is to save as many stores and as many jobs as we can, while making the business fit for the future.”