The Debenhams is considering the sale of its assets, including a network of Danish shops, to bolster its finances after a brutal terms of trade caused third profit warning in six months.
The Executive Director of the Department of the group, Sergio Bucher, blamed falling numbers of customers and heavy discounting elsewhere on the main street because of the fresh collapse in earnings.
“These exceptionally hard times in the UK and retail in our business reflects this,” he said. “We don’t see these conditions in the near future.”
Of Debenhams now expects full-year earnings will be between £35 million and £40 million, which is significantly below the city forecasts of £50.3 m. That compares with more than £150 million pounds five years ago.
The first profit-warning came in Debenhams in January after the failed Christmas, and Bucher said trading in may and early June also fell short of expectations, as women cut back on clothes and makeup.
A quick guide to why Department stores are struggling?
Department stores were once celebrated as the temples of consumerism. But mid-market chains like debenhams and house of Fraser burdened with large Department stores in the city centre, where the number of buyers is shrinking, but costs such as rent and wages, rise.
The Internet is killing the high street
By the end of this year the British will have ruined almost 70 billion through their phones and tablets. That the fun continues, with online sales predicted to hit almost £100 billion by 2021, according to consultants for the retail economy. Department stores are in the line of fire, and now fewer Britons bothering to physically visit the high street, with clothes and sales gadget household moving online fast.
The British were faced with a sharp increase in the cost of living after the referendum the EU. Last year inflation increased 3%, while wages remained stuck between 2% and 2.5%. According to experts paid the most wages of deals last year was closer to 2%. This is done to a serious decline of inflation-adjusted income and lower income of most buyers.
Want a British experience, not things
The volume of clothes and shoes that are sold in the UK fell by 0.8% last year and is forecast to fall again this year, according to globaldata consulting retail. The decline accused the retailers passing on higher cost sources resulting from the weakness of the pound, but the British surplus of pleasures, such as leisure and food.
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Debenhams shares closed down nearly 11 percent at 17.50 R. They had lost half of its value since the beginning of the year, when they move from hand to hand for 35P.
The retailer has already embarked on a £20 million cost-cutting drive, but has now raised the stakes in other areas.
He will spend no more than $ 90 million on capital expenditures in 2019 has dropped From £140m this year. He also is considering selling assets, including a profitable Danish chain stores store du Nord and printing firm Magenta, strengthen its financial position.
There is also evidence that consumers in their Teens and 20’s years, we have to be more careful with their money. Shares in AIM-listed chain of sports apparel Footasylum fell, closing more than 52% on 80 points after it said trade had been affected by weak consumer confidence.
Recent knocks to confidence the high street comes after house of Fraser announced it will close more than half its UK stores, including its flagship on Oxford street in London, putting 11,000 jobs at risk. This is one of a string of retailers that use the company voluntary agreement, a form of insolvency to close the outlet.
Others, such as toys R us and shop, collapsed into administration in recent months, due to weak consumer spending and the shift to online shopping.
Bucher said Debenhams, which in April reported that 85% in first-half profit to £13.5 million, is trying to negotiate a reduction in rent with landlords for 25 stores that lease renewal in the next five years. He reiterated plans to close 10 unprofitable stores and reduce the Size of the outlets 30, through the transfer space for restaurants and other food businesses. The network consists of 241 stores, 165 of them in the UK.
Bucher said tough trading conditions, with some competitors offering for 10 of the last 15 weeks discount while some fashion chains offer 50% -60% price reduction. The Debenhams is also to reduce prices, but to a lesser degree.
As comparable sales fell 1.7% in the 15 weeks to June 16, while digital sales grew by 16%. Clothing sales struggled while beauty is decreased due to the decline of makeup sales, although care is not better.
Bucher, a former Amazon Executive who took the reins at debenhams two years ago, has promised to introduce further savings and focus on your online business. The group has upgraded some of the shops and looks forward to working designer will help turn sales around, for example, off – brand, worn by the Duchess of Cambridge and Richard Quinn.
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On Friday, house of Fraser landlords will vote on a plan that could lead to the closure of 31 of the 59 stores, including Oxford Street and the main big stores of the city, such as Birmingham, Cardiff and Edinburgh. Two chains crossed in 18 places with debenhams is expected to benefit from the derogation of a competitor.