Alongside lacklustre interim results, Debenhams has revealed details of its turnaround strategy put together by Sergio Bucher, the former Amazon executive who took charge of the business last October.
Entitled ‘Debenhams Redesigned’, the strategy aims to boost its appeal as a ‘destination’ shop and improve its digital offering, whilst driving efficiency by simplifying the business. The plan includes a review of up to 10 of its 176 stores in the UK which may lead to their closure over the next five years. It is also considering exiting some “non-core” international markets.
Debenhams also unveiled that it had begun consultation on the closure of one of its central distribution centres and around 10 smaller regional warehousing facilities.
As part of a ‘Fix the Basics’ plan that is already under way, Debenhams is switching around 2,000 staff to customer-facing roles, decluttering its stores, replenishing stock faster and improving its brand offering. To capitalise on growth in the leisure market, Debenhams also plans to step up investment in in-store cafes, restaurants and beauty services.
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. If we deliver differentiated and distinctive brands, services and experiences both online and in stores, our customers will visit us more frequently and, having simplified our operations to make us more efficient, we will be able to serve them better and make better use of our resources.”
He added that the new strategy will set Debenhams on course for a “successful and profitable future.”
For the six months to 4 March 2017, Debenhams pre-tax profit fell 6.4% to £87.8m on revenues up 1.8% to £1.35bn. UK like-for-like sales rose 0.5%, which Debenhams said reflected growth in its online business and non-clothing areas. However, UK EBITDA was down 6% and performance of its international business was described as “mixed”.