Debenhams set to close a third of stores under emergency plan to save £100m
Debenhams could close up to a third of its 166 UK stores as it reports sharp falls in profits
TROUBLED Debenhams could close more than 50 stores in a bid to save £100million, it has been reported.
The embattled department store chain could shut as many of a third of its 166 UK shops following a sharp fall in profits and tumbling share prices as consumers turn to online shopping.
After reporting sharp falls in sales following three profit warnings this year, the chain had already announced plans to cut up to 90 jobs at its headquarters, 320 store management jobs and close 10 stores.
But now sources have told that the retailer wants to save a further £30million by freezing payments to shareholders.
It is also considering a plan to save £70 million by negotiating rents with landlords and closing up to 55 stores.
to turn around Debenhams' falling fortunes, with the move expected to be announced with the chain's annual results on Thursday.
Industry insiders say the firm is looking at options including store closures, more job losses or even a company voluntary arrangement (CVA) - which allows a struggling insolvent business to keep trading while it makes a plan to pay off its debts.
Debenhams has already identified 30 stores which could be resized to save money - but it has been held up by long and inflexible leases, it's said.
It is not known yet which stores will be resized or are set to close.
The Sun has asked Debenhams for more information on potential store closures and we will update this story if we hear back.
told the BBC: "The fact KPMG have been brought in does not surprise me. Debenhams will be wanting to look at all the options open to them.
"The harsh reality is that they are operating in one of the most challenging parts of retailing at the moment.
"Consumers are increasingly shopping online, and they are also spending more on things like holidays and the experience economy.
"The other part of the pincer movement Debenhams is facing is that they are being squeezed on costs, with things like increasing rents and business rates, and rising wage and utilities bills.
"It all means that department stores are incredibly expensive to operate."
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Sports Direct boss Mike Ashley, who bought House of Fraser out of administration and who owns just under 30 per cent of Debenhams, is understood to be keeping a close eye on the latest developments.
Sports Direct ruled out a takeover of the struggling chain in September.
The chain has lost more than 90 per cent of its market value since 2006, when it was relisted on the London Stock Exchange after being taken private in 2003.
As a result of the news, Debenhams shares dropped more than 17 per cent in morning trading.
The store issued an emergency statement to try and calm traders.
It has said it expects full-year pre-tax profits of around £33 million before exceptional items, which is within the current market range of £31 million to £36.5 million.
Underlying earnings are forecast to come in at £157 million, with net debt of approximately £320 million.
Debenhams assured that it has continued to strengthen its financial position.
Chief executive Sergio Bucher said: "The market environment remains challenging and underlying trends deteriorated through the summer months.
"Nevertheless the product and format improvements we have tested are gaining traction and we are ready to scale up some of our strategic activity ahead of peak.
"Having put in place a leaner operational structure and strong leadership team, and taken action to strengthen our financial position, we are well equipped to navigate these market conditions and take advantage of any trading opportunities that emerge."
Chairman Ian Cheshire reiterated that the board is continuing to work with its advisers "on longer term options, which include strengthening the balance sheet and reviewing non-core assets.
He said: "This activity is in order to maximise value for shareholders and protect other stakeholders, including our employees."
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