The retailer suffered pre-tax losses of £491m for the year to 1 September © Debenhams
The retailer suffered pre-tax losses of £491m for the year to 1 September © Debenhams

Debenhams to consolidate and automate warehouses

26 October 2018

High street store Debenhams will further streamline and automate its warehousing operation as part of a supply chain review, after announcing the closure of its Northampton distribution centre last year.

In its annual financial and strategic update, the company said it would carry out an “end-to-end structural review of the business”, including the efficiency of the supply chain.

This would involve “further consolidation and automation” of its warehouses, it said. Debenhams has so far been unable to confirm whether this will involve warehouse closures or job losses.

A spokesperson for Debenhams told SM the move was “a continuation of the previously announced closure of our Northampton warehouse next year”. The department store spent £2m on warehouse closures in the period of the financial report, (down from £6.2m in 2017), a figure which includes redundancy costs for warehouse staff.

It added that it would continue with a warehouse automation programme over the next year.

Preliminary financial results indicate Debenhams, like many high-street retailers, has fallen victim to “volatile and challenging” market conditions, with pre-tax losses of £491m for the year to 1 September.

As a result of the losses, the company said it was taking a “prudent approach” and assuming “no improvement in the trading environment for the foreseeable future”.

This will involve making £30m cost savings for the next financial year, rising to £50m by 2020, it said. Changes to its warehousing and supply chain operation are part of these savings.

The department store also revealed it would be closing 50 stores over the next three to five years, 40 more than previously planned.

Sales were down 1.8% to £2.9bn last year, while pre-tax profit was down 65% at £33m.

Sergio Butcher, Debenhams’ chief executive, said the balance sheet reflected a “tough year for retail”, forcing the company to take “tough decisions on stores where financial performance is likely to deteriorate over time”.

“We are taking decisive steps to strengthen Debenhams in a market that remains volatile and challenging,” he said.

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