Debenhams scales back investment to reduce debt

Debenhams is scaling back investment in stock and store openings next year in a bid to reduce its debt and improve its share price. It comes as the chain reports a decline a fall in profits in its full year results.

The department store chain says that net income has fallen from £79m to £77.1m for the year to August 30. It adds that in the first six weeks of the new financial year, like-for-like sales declined by 4.2%, compared with a fall of 0.9% fall over the previous year.

Debenhams chief executive Rob Templeman says that “market sentiment” towards Debenham’s capital structure has “weakened” and its level of debt is having a negative impact on valuations of the company.

It is hoping that reducing its stock will save up to £15m over the year on top of £20m of savings made earlier in the year. Meanwhile, it will open fewer stores over the next financial year although it is not clear whether the refit of the chain’s 135 stores, which began last year, will be affected.

Templeman says fear of unemployment is the biggest factor affecting consumer behaviour but claims that Christmas sales may be better than expected because people are still willing to buy some high-fashion items.

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