The future of one Cornwall’s major high street retail stores remains uncertain after bosses refused to say whether it was on a planned closures hit list.
Debenhams is expected to cut jobs and close eight stores over the next five years after a poor festive trading period led to a major profit warning.
Already two stores have closed or have been earmarked for closure – in Farnborough and Eltham.
These are the only two confirmed by the company out of a list of 10 in the UK.
Debenhams currently has 240 stores across 27 countries including 178 in the UK, of which one is in Truro.
The firm would not say if the future of its Cornish store was assured or whether any staff at the Lemon Quay store could potentially face the axe.
Debenhams at Lemon Quay in Truro (Image: Sally Adams)
A spokesman said it was company policy not to name any store that is earmarked for closure until proper consultation had been carried out with staff.
He said: “It’s not our policy to create any unnecessary nervousness among staff and customers. In theory 10 stores could close over the next five years. Only two have been named as Farnborough and Eltham.”
The announcement that some stores could close was made last spring as the company announced its annual results and new chief executive Sergio Bucher unveiled a recovery plan.
At the time his plan said: “We have a plan to transform the shopping experience at Debenhams. Shopping for fashion and beauty is about buying something that will make our customers look good and feel great, but it is also about enjoying the whole process.
“Our customer research shows that two thirds of the women surveyed regard leisure to be as important or more important than convenience when shopping.
An aerial view over Lemon Quay at the time the shop first opened
“The trend towards online growth in discretionary retail sales is also well established. Shopping via mobile phones is currently driving all the growth in retail sales. Mobile phones are being used in all channels, not just online, as they become an integral part of everyday life.
“Looking at the way our customers are shopping for fashion and beauty and interacting via their mobile phones, we see an opportunity for Debenhams to be the leader in what we define as the new ”Social Shopping” that is shopping as a fun leisure activity enjoyed with friends and family and shared via social media.
“We will give our customers more reasons to come to Debenhams, whether they are at home, on the train or in the high street, and build a stronger relationship with them, centred around mobile interaction.”
The company statement added: “We will create an environment both online and offline that is engaging and inspiring, with great service, and a shopping journey that is convenient and reliable so they will want to come back to us more often.”
The news that jobs and stores could be cut came up again after a poor festive trading period led to a major profits warning.
Shares in the department store dropped by 15% to 30p, the lowest level since the 2008 financial crisis, after it warned that sales of seasonal gifts and clothing had fallen despite heavy discounting.
Debenhams on Lemon Quay in Truro
Sales fell 2.6% at Debenhams’ established UK stores, open for more than a year, in the 17 weeks to 30 December.
In a gloomy statement on its Christmas trading performance, issued a week earlier than anticipated, Debenhams said profits would be about 30% lower than expected and warned that the current UK trading environment was “volatile and highly competitive”.
Profits for the full year were now expected to be between £55m and £65m – sharply below City expectations of £83m.
New data published on Friday indicates that high street sales fell 2.3% in December, the fifth consecutive year of decline.
High street fashion sales were particularly poor, down 3.8% in December to mark the third month of decline according to the latest monthly survey of mid-sized retail chains by advisory firm BDO.
In contrast, online sales rose 21.4% with the week up to Christmas Eve recording a near-40% surge as shoppers gain confidence in last minute deliveries, according to BDO.
The BDO, Next and Debenhams figures indicate that retailers without a strong online service and a large presence in fading shopping malls and high streets are facing serious difficulties.
Other retailers are also consolidating their store estate including Marks & Spencer and Toys R Us, which is set to close more than 20 stores under an insolvency process finalised before Christmas.
Mr Bucher said Debenhams was accelerating plans to cut jobs by simplifying its management structures. It will also be stepping up business rates reviews as part of aims to save an extra £10m in costs this year.
Bucher told the Guardian he had faith in his turnaround plan and remained “optimistic about the future of Debenhams” adding: “The market has been challenging and particularly promotional in some of our key seasonal categories and we have responded in order to remain competitive for our customers, which has impacted our profit performance.”
Source: Cornwall Live