Hundreds of jobs in danger as Debenhams boss announces warehouse closures
20 April 2017
The new boss of department store chain Debenhams has unveiled plans to close 11 warehouses and put up to 10 stores under review, in a move impacting at least 220 jobs.
Sergio Bucher, who took over as chief executive last October, outlined an overhaul that will see the group shut one of its three distribution centres run by DHL, 10 smaller in-house warehouses and potentially axe up to 10 of its 176 stores over the next five years.
The DHL warehouse employs 220 staff and will shut in two years' time, but Debenhams hopes to be able to redeploy many staff affected by the smaller warehouse closures.
Details of his plans came as the group announced a 6.4% drop in pre-tax profits to £87.8 million for the six months to March 4.
It is hoped that DHL will also seek to redeploy many employees affected by the closure of the Lodge Farm distribution centre in Northamptonshire.
Mr Bucher's turnaround will also see the group cull in-house brands and leave some international markets, while also shifting around 2,000 staff to customer-facing roles as part of a drive to lure shoppers back to its stores.
This will see the group offer customers experiences as it battles against a wider trend to switch spending away from clothes towards eating out and holidays.
Mr Bucher said: Our customers are changing the way they shop and we are changing too.
"Shopping with Debenhams should be effortless, reliable and fun, whichever channel our customers use. We will be a destination for 'social shopping' with mobile the unifying platform for interacting with our customers."
Debenhams is also looking at trialling departments that will tie up click and collect with personal shopping services in the autumn, while also considering converting some smaller stores to outlets.
The group said it will report back with more details on the plans and international markets being eyed for exit in October.
Debenhams sought to give assurances that the overhaul was "not about job losses", adding that as well as mulling store closures, it is also aiming to open four shops in the next few years.
Mr Bucher said that while none of its stores are unprofitable, those under review have been identified as possibly becoming loss-making in the future.
Details of the revamp follow a strategy review by Mr Bucher, a former Amazon fashion chief who was brought in last autumn to replace previous boss Michael Sharp.
He said he wants to de-clutter stores after customers complained it was like a “treasure hunt” shopping in some branches, while also adding more in-store beauty makeovers, including nail and blow dry bars, as well as a possible beauty services at customers’ homes.
“This will deliver a step-change in our customer experience,” said Mr Bucher.
Half-year results released alongside the strategy overhaul revealed a tough first half for the UK business, where operating profits fell 11.3% to £67.5 million and like-for-like store sales dropped 1.3%.
Shares dropped 5% after the figures.
Debenhams saw a more robust performance online in the UK, where sales rose 1.7%, while it added that trading was “mixed” across its international division.
But its overseas arm, which is led by its biggest international business, Magasin du Nord in Denmark, received a boost from the weak pound, with operating profits jumping 12.3% to £26.4 million.
Retail analyst Mark Photiades, at Cantor Fitzgerald, said Mr Bucher’s plans looked “credible” at first glance.
He cautioned that “as ever with new management and new strategic ambitions, execution of the strategy will be key”.
Peter Byrne/PA Wire