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Debenhams cuts 2,500 jobs as business continues to be slow following the Covid-19 lockdown

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Debenhams is cutting 2,500 jobs as insure trade remains slow following  from Covid-19 lockdown. 

The department store retailer, whose 200 shops include 142 in the UK, has so far reopened 124 UK stores from lockdown. Today it confirmed that it would cut 2,500 jobs. The coronavirus pandemic came at a time when Debenhams, along with other department store businesses, was already struggling to give shoppers who were increasingly buying online a reason to come into its shops instead.

Debenhams went into administration on the way into Covid-19 lockdown, doing so a year after its previous administration. At the time it said it would not reopen its 11 shops in Ireland.

In a statement, Debenhams said today: “We have successfully reopened 124 stores, post-lockdown, and these are currently trading ahead of management expectations. At the same time, the trading environment is clearly a long way from returning to normal and we have to ensure our store costs are aligned with realistic expectations.

“Those colleagues affected by redundancy have been informed and we are very grateful to them for their service and commitment to Debenhams. Such difficult decisions are being taken by many retailers right now, and we will continue to take all necessary steps to give Debenhams every chance of a viable future.”

It is reported that the retailer is to cut the number of shop assistants in its stores as trade remains slow. Sales and sales support management and distribution centre jobs are also thought likely to be included.

Andy Barr, retail expert and co-founder of online price tracking website Alertr.co.uk suggests the department store group could become online only. “With administrators already called upon in April, more than 1,000 job losses and the announcement that 15 stores won’t be reopening their doors, it seems as though the situation has truly gone from bad to worse in terms of the future prospects of the already struggling Debenhams.

“One could argue that the time has come for the iconic brand to accept its fate, but with such a rich history and the obvious hope that the dire situation can be reversed, key decision makers are  clearly doing all they can to keep the company afloat by making these serious sacrifices. With Debenhams having faced struggles for a number of years in terms of previous store closures, keeping up with high-street competition and staying at the forefront of online exposure, these final decisions will be make or break for its future.

“With the retail sector taking such a hit during Covid-19 and many retailers making the move to solely trade online to improve sales, could it one day be that Debenhams only exists in the digital realm?”

Nigel Frith, senior market analyst at asktraders.co.uk said the news of job cuts would bring havoc to Debenhams’ workers and that it was important to have clarity about how those staff would  now be supported.

“What we are seeing here is simple,” he said. “If the firm was in a weak position going into the coronavirus lockdown, there is a good chance that it will not be coming out better the other side – and it’s looking like it won’t be. In recent years fast fashion and online businesses have thrived, whilst our more traditional brands have struggled to transform and adapt to the current economic climate.”

The news comes a week after retailers including WH Smith and M&Co last week said they would cut just under 1,900 jobs between them. 

Three-quarters of FTSE retailers issue profit warnings in first half of 2020

Deebenhams is far from alone in struggling following Covid-19. Today’s news comes as research suggests that almost three-quarters of UK stockmarket-listed retailers have issued profit warnings in the first half of 2020. Debenhams is not among them since it is no longer listed on the stockmarket. 

EY research found that stockmarket-listed retailers had issued 47 profit warnings during the first half of 2020, of which nine came in the second quarter. Last year retailers issued 32 all year. But in the first half of 2020 72% of all stockmarket-listed companies  issued a warning.

Mona Bitar, consumer leader at EY, UK & Ireland, said: “While lockdown restrictions have eased, providing some relief for FTSE retailers, footfall remains well below pre-pandemic levels and uncertainty remains.

“The impact of Covid-19 has dramatically accelerated the shift in consumer behaviour, requiring retailers to adapt at an extraordinary pace. But what is certain, is that retailers cannot afford to continue as usual, in the hope normality will resume soon, almost all will need to undertake some transformational and turnaround activity to help see them through.”

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