Debenhams is taking "decisive action" to generate cash, reduce debt and reshape its store estate after confirming significant losses in its preliminary results for the 52 weeks to 1st September.
While the retailer enjoyed good digital growth of +12%, it confirmed a pre-tax loss of £495.1m and an EBITDA drop of -27.5% (-35.6% in the UK, offset by international growth), while LFL sales fell by -2.3%.
During the period, Debenhams paid out £12.3m in exceptional charges related to its Redesigned strategy, plus non-cash exceptional write-downs of £512.4m as a result of "goodwill and store impairment, lease provisions and systems write-offs". It also significantly cut investment in its turnaround plan.
Consequently, the retailer has announced that it is accelerating its store closure plan – from 10, to up to 50 underperforming stores over 3-5 years, while developing a lower-cost approach for around 20 stores, and bringing its focus to bear on up to 100 Redesigned stores.
CEO Sergio Bucher comments: “It has been a tough year for retail in 2018 and our performance reflects that. We are taking decisive steps to strengthen Debenhams in a market that remains volatile and challenging. Working with our new CFO Rachel Osborne, and the board, I am determined to maintain rigorous cost and capital discipline and to prioritise investment to achieve profitable growth. At the same time, we are taking tough decisions on stores where financial performance is likely to deteriorate over time.
“Debenhams remains a strong and trusted brand with 19m customers shopping with us over the past year. Our transformation strategy is gaining traction, with positive results from new product and new formats, general acclaim for our store of the future in Watford and digital growth that is outpacing the market. With a strengthened balance sheet, we will focus investment behind our strategic priorities and ensure that Debenhams has a sustainable and profitable future.”