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UK’s Debenhams steps up spending in bid to return to growth

Debenhams, Britain’s second-largest department store group, on Thursday detailed a plan to return to growth by making it stand out more on the high street with an enhanced digital offering.

Following a strategic review by new Chief Executive Sergio Bucher, a former Amazon executive, the group also plans to drive efficiency by simplifying and focusing the business. Capital expenditure would be increased.

Debenhams said it would review up to 10 UK stores for closure over the next five years, and exit some brands and non-core international markets.

It has also begun consultation on the closure of one central distribution centre and around 10 smaller regional warehousing facilities.

“The objective (is) to define clearly what Debenhams stands for and simplify the way we operate to benefit customers today and therefore shareholders in the future,” it said.

Debenhams, whose shares have fallen a third over the last year, said additional investment was required to upgrade its mobile systems, supply chain and its store estate.

It said annual capital expenditure would be 150 million pounds ($192.2 million) between full year 2018 and full-year 2020 versus current annual capex of 130 million pounds.

Total exceptional costs over 2017-2020 would be 50 million pounds of which approximately half would be cash.

Debenhams, which is second to department store chain John Lewis by revenue, said a “Fix the Basics” plan was already underway. It would switch around 2,000 more staff to customer facing roles, declutter stores with a 10 percent reduction in stock options and replenish stock faster.

Debenhams also reported a 6.4 percent fall in pretax profit of 87.8 million pounds ($112.5 million) for the 26 weeks to March 4 – in line with market expectations. (Reuters)

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