Debenhams is to axe a further 2,500 jobs as it restructures management roles at stores and distribution centres, the latest in a grim series of cutbacks on the high street.
The department store group, which is in its third insolvency process in two years and last month put itself up for sale, said in a statement on Tuesday that while the 124 stores it has reopened in the UK are “trading ahead of management expectations”, it needed to align costs with reality.
“The trading environment is clearly a long way from returning to normal,” it said.
“Such difficult decisions are being taken by many retailers right now, and we will continue to take all necessary steps to give Debenhams every chance of a viable future.”
The job cuts, which were first reported by Retail Week, are concentrated in store management roles and include scrapping the roles of sales manager, visual merchandise manager and selling support manager. The changes are similar to those at electricals retailer Dixons Carphone, which last week said 800 employees would be leaving the business.
Speculation has long swirled about the medium-term future of Debenhams, which is owned by a consortium of lenders including GoldenTree, Alcentra and Silver Point Capital. It closed about 20 stores at the start of this year, opted not to reopen a similar number after the UK’s lockdown ended and has put its Irish subsidiary into administration.
Even so, its store estate is still more than twice as big as that of rivals House of Fraser and John Lewis, and prior to the pandemic its online sales accounted for only around 20 per cent of the total. Unlike mid-market rival Marks and Spencer, it does not have a food retail business to buttress faltering clothing and beauty sales.
It has not published any detailed financial information since 2018, but when FRP Advisory was appointed administrators in April it had secured debt of £723m and at most £245m of realisable assets. Its unsecured bonds, which are repayable next year, trade at 4p in the pound.
The news follows announcements of job losses arising from cost-cutting at Boots, John Lewis, Dixons and Arcadia, along with redundancies following insolvency processes at Monsoon, DW Sports, Oak Furnitureland, Harveys and M&Co among others.
Debenhams has already axed more than 2,000 jobs this year and industry experts are expecting more redundancies in retail as the UK government’s job retention scheme winds down, forcing employers to decide whether to retain staff or not. Although non-essential stores were permitted to reopen in England from June 15, trade has not returned to normal levels.
Springboard this week reported that footfall to all retail destinations remains a third lower than in 2019, while high streets and shopping centres — where Debenhams stores are overwhelmingly concentrated — have generally performed worse than out-of-town retail parks.
Retail sales data compiled by the British Retail Consortium for July showed sales by value rising 3 per cent from 2019 levels, but most of the increases were in categories such as DIY and IT equipment. Sales of clothing, footwear and beauty — key categories for department stores — were all lower.
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