London: Debenhams Plc said it will shut stores as a new chief executive officer recruited from Amazon.com Inc taps his experience at the e-commerce provider to try to revive the UK retailer’s flagging sales via a stronger online offering.
Debenhams, which operates a flagship store on London’s Oxford Street, said it will close as many as 10 UK outlets over the next five years and begin consultations on shutting one of three central distribution centres. It’s also considering scrapping some in-house brands amid concerns that younger shoppers are shying away from offerings such as Jasper Conran and John Rocha.
The department-store chain’s shares fell as much as 5.9 per cent after it said pretax profit for the first half fell 6 per cent to £88 million (Dh413 million, $113 million).
“Our customers are changing the way they shop and we are changing too,” CEO Sergio Bucher said in a statement Thursday.
Replenishing stocks
Bucher replaced Michael Sharp in October, having spent three years as a fashion executive at Amazon. He also previously worked at sportswear maker Puma SE and Spanish clothing retailer Inditex SA. The revamp at Debenhams is aimed at reducing clutter and replenishing stocks more quickly — a key element of Inditex-owned fast-fashion chain Zara’s success — the UK company said.
The investments in digital offerings are aimed at targeting shoppers via mobile devices, so that they visit stores more regularly, the company said. Debenhams plans to develop its Click & Collect service to link it with features such as personal shopping and said it sees opportunities for partnerships with e-commerce providers.
Debenhams said it expects its gross margin for the year to fall 25 basis points, highlighting the challenges facing bricks-and-mortar retailers seeking to adapt to the world of online shopping.
“We believe Debenhams remains structurally challenged by a customer proposition lacking differentiation and an inflexible store estate, forced to continue investing in assets delivering a lower return,” Berenberg analysts including Michelle Wilson warned in a note.
