• Pre-tax profit falls 6.4% to £87.8m
  • UK like-for-like sales edged up 0.5%
  • New strategy Debenhams Redesigned launched

Debenhams has posted a drop in pre-tax profits as new boss Sergio Bucher unveiled a digitally focused strategy to “define clearly what Debenhams stands for.”

The department store retailer reported a 6.4% drop in pre-tax profits in the 26 weeks to March 24 to £87.8m, while group EBITDA declined 2.5% to £149.1m.

UK like-for-like sales increased 0.5% during the period, which the retailer said was due to “further progress in growing non-clothing categories and strong online momentum”.

New strategy

The retailer’s new strategy is entitled Debenhams Redesigned.

It is focused on three pillars, ‘destination, digital and different’, as well as delivering efficiencies to simplify business operations.

Debenhams aims to become a market leader in ‘social shopping’, which it said it will achieve by “offering exciting new products, services and experiences, as well as building on category strengths.”

The retailer also intends to invest in improving its mobile offer, which reported a 64% UK sales boost during the period, as a means of unifying its online and offline channels.

Warehouse closures

The department store retailer is reducing stock options by 10% to “declutter” stores and is focused on is to create a more responsive supply chain to ensure it has innovative products that are relevant to its shoppers.

Debenhams is overhauling its operations to facilitates this strategic shift.

The retailer has entered a consultation period on the closure of one central distribution centre and 10 regional warehouses to drive efficiencies, but has not said how many jobs could be lost as a result.

Ten stores are being reviewed for closure over the next five years. The retailer will plough investment into upgrading its mobile systems, supply chain and store estate, and has increased its annual capital expenditure until 2020 from £130m to £150m to facilitate this.

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.

“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.”

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