LONDON, United Kingdom — British department store group Debenhams is in talks with lenders and looking to bring in new sources of funding as it battles for survival following another plunge in sales.
The 241-year-old group said on Thursday sales fell 6.2 percent at its main British business in the 18 weeks to Jan. 5, and by 3.6 percent over the six-week Christmas trading period.
Once the country's biggest department store chain, Debenhams has reported a string of profit warnings as it failed to keep pace with consumers moving online and to cheaper outlets, hammering its shares and wiping 80 percent off its market value.
Striving to avoid the fate of collapsed rival BHS and House of Fraser, which was rescued by Sports Direct-owner Mike Ashley, the company has launched a programme to close 50 of its underperforming stores, putting about 4,000 jobs at risk.
Debenhams said net debt remained within the rules of its banking agreements but it had opened talks with its lenders about refinancing its borrowings and could seek to bring in new sources of funding to bolster its balance sheet. Asset disposals have been put on hold during the talks, it added.
Retailers are struggling with a slowdown in spending amid uncertainty whether Britain will manage an orderly withdrawal from the European Union in less than three months.
"We responded to a significant increase in promotional activity in the market, particularly in key seasonal categories, in order to remain competitive," Bucher, a former Amazon, Nike and Inditex executive, said in a statement.
Debenhams said the changes it was making were working, with digital sales improving and trading in newly designed stores outperforming the rest of the chain.
It said it remained on track to hit an annual profit target of just 8.2 million pounds ($10.5 million) after saying it would find 80 million pounds of costs to remove.
"We have worked hard to deliver the best possible outcome in very uncertain times for retailers," Bucher said.
By Kate Holton, editors: Paul Sandle and Mark Potter.