High retailer Debenhams has announced plans to close up to 22 stores in the UK in 2020 as part of a Company Voluntary Arrangement (CVA), so it can reshape the business and keep trading through the current tough trading environment.
Debenhams is currently in administration and does not have a CEO and its UK store sales declined by 7.4% in recent H1 results for the first months of 2019. Group gross transaction value (GTV) declined by 5.3% for the start of the year in comparison with a smaller decline of 1.6% in 2017/18. UK revenue also saw losses of 5.4% compared with the previous year that saw losses of 3.7%.
Even though digital sales grew by 2.5% for the start of 2019, it was still less than the previous year that saw a 9.7% increase in sales.
Debenhams executive chairman Terry Duddy said: “The issues facing the UK high street are very well known. We are announcing today the next phase of our restructuring, to reshape our store portfolio which will give Debenhams the platform to deliver a turnaround. With committed funding and supportive new investors, this business can look forward to a viable and sustainable future.”
Analysts predict positive changes need to happen
GlobalData senior retail analyst Sofie Willmott said: “With extensive media coverage of its troubles in recent months, Debenhams must start to implement visible positive changes quickly to reassure shoppers that it is bettering the shopping experience and that it is a trustworthy and reliable retailer.
“Recent improvements to flagship branches such as Oxford Street and Intu Lakeside demonstrate that despite being on a major cost-cutting mission, the retailer has been able to enhance the look and feel of locations, adding elements to give more prominence to food and services. However, a more enticing store environment alone will not solve all of its problems and Debenhams must revitalise its product offer if it is to win.”