What will Debenhams plan mean for Ireland?

British department store chain Debenhams has unveiled a new strategy which could involve the closure of a number of stores in Britain and an exit from some of its international businesses.

The review, ordered by new chief executive Sergio Bucher, is aimed at improving Debenhams’ digital offering – particularly mobile – and making its stores more attractive to shoppers to take advantage of a trend towards what the company calls “social shopping”.

Bucher, who had spent the last three years at internet retailer Amazon.com, took over at Debenhams last October. His appointment was seen as reflecting the increasing importance of online sales and distribution to British retail chains.

Under his plan, up to ten of its 176 stores in Britain will be reviewed for closure over the next five years if they do not meet profit targets. One of its central distribution centres, as well as ten smaller warehouses, will be closed.

The plan also includes a reference to exiting “non-core” international markets, but Debenhams said it would give more details on its international plans when it announces full-year results in October.

Debenhams’ international business includes its stores in the Republic of Ireland, which emerged from examinership last year, as well as Magasin du Nord, its largest international business, which is based in Denmark. Debenhams also has a number of franchise stores in other countries.

It said the same elements of its approach to Britain would be applied to the review of its international businesses. These included reviewing low-profit businesses for closure, expanding successful businesses and looking at new markets and online growth.

At the time of its annual results last October, Debenhams said its Irish businesses were set for a “profitable future” after coming out of examinership.

Today’s moves are aimed at returning the department store group to growth. Pre-tax profits in the six months to March fell by 6.4% compared with a year earlier to £87.8m.

British sales and profits fell, but international sales were up 12.6%, while international profits grew by 12.3% to £26.4m, helped by a stronger euro and Danish kroner and savings brought about by the Irish examinership process.

Examinership cost the group £4m, including legal fees and redundancy costs.

The Irish business sought court protection in May last year having lost €6.7m in the year to the end of August 2015. Debenhams said these losses reflected high operating costs, including above-market rents and other overheads. All 11 stores and the Irish business’s website remained open during the process.

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