Debenhams has announced plans to close up to 50 underperforming stores over the next three to five years after reporting a record loss of £491.5m in preliminary financial results.
The closures mean that 2.4m sq ft of space will be closed on the UK’s high streets.
The retailer also said it would develop a “new lower-cost approach” for a further 20 of its 166 stores, which currently cover 15.9m sq ft, according to Radius Data Exchange.
It will focus investment on delivering its modernised brand “Debenhams Redesigned”.
Its preliminary results for the year to 1 September highlighted challenging market conditions and the retailer said its priorities were “to generate cash, reduce debt and reshape store estate”.
See also: Retail in crisis: the story so far
Debenhams said asset value declines of £514.m were “primarily relating to store and lease provisions, systems and impairment to historic goodwill”.
The record loss compares to profits of £59m in 2017.
Chief executive Sergio Bucher said: “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 chief financial officer 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.”
Listen to an EG interview with Sergio Bucher
Bucher noted a focus on the company’s “transformation strategy”, with new products, store formats and digital growth.
He added: “With a strengthened balance sheet, we will focus investment behind our strategic priorities and ensure that Debenhams has a sustainable and profitable future.”
This latest announcement brings the total amount of retail space lost in 2018 up to a startling 18m sq ft across 1,500 stores, according to Radius Data Exchange.
See also: What’s next for Debenhams and John Lewis?
EG retail analyst James Child said: “The sector is struggling to reinvent itself for the consumer of the 21st century and failing to adapt to ever-evolving trading conditions.
“Long-term leases and high rents for large units have trapped department stores in covenants from which they have struggled to remove themselves, and, combined with lofty business rates, their physical portfolios have become financial black holes.
“The colossal rise of internet spending, which is nearly £1 of every £5 spent in UK retail, has had a disturbing effect on department stores. There is no longer a need to stockpile goods on the high street at such volume, given a consumer’s ability to digitally interact with virtual goods.”
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