LONDON (Alliance News) - Struggling department store chain Debenhams PLC on Thursday said it will lower the axe on a fifth of its stores after reporting a swing to an annual loss.
The retailer unveiled a plan to close 50 underperfoming locations within 5 years, five times more closures than what the chain had previously announced, as it hopes to "address structural challenge and drive profitable growth". Currently Debenhams trades from 240 stores.
Furthermore, in a bid to save cash the department store giant will skip its final dividend. A year ago it paid a final dividend of 2.4 pence per share for a total payout of 3.425p. Debenham paid a 0.50p interim dividend in the current year.
Chief Executive Officer 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."
For the financial year ended September 1, Debenhams posted a pretax loss of GBP491.5 million compared with a GBP59 million profit the year before. Revenue for the year declined 2.6% to GBP2.28 billion from GBP2.34 billion.
Higher distribution costs and administrative expenses contributed to the fall in the company's profitability.
Debenhams also recorded GBP512.4 million of non-cash exceptional write-downs related to store and lease provisions, systems and impairment to historic goodwill.
These results came after a string of profit warning issued by the retailer during the year.
In September, Debenhams said it expected annual pretax profit to come in at GBP33 million, in line with the market expectations of between GBP31 million and GBP36.5 million. On an adjusted basis pretax profit for the year was GBP33.2 million.
Shares in the retailer were trading down 1.2% at 8.41 pence each. The stock is down 76% so far in 2018.
