Debenhams passes own 'stress tests'
today Dec 6, 2018
Debenhams has said a strategic assessment undertaken by management has proved the viability of the business over the next three years.
The so-called stress test assessed the retailer’s ability to meet its liabilities over a three-year period to 28 August 2021, taking into account its current financial position and the main risks facing the business in theoretical scenarios.
“The board is in agreement that Debenhams is a viable business”, the company said in its annual report published this Wednesday.
It said the three-year span was selected because it reflects the pace of change in retail and the uncertainty surrounding the UK’s decision to exit the European Union. It also aligns with the retailer’s Debenhams Redesigned strategy and its three-year planning process.
The retailer, which announced a record loss of £491m in preliminary financial results, said that competition for customers will be one of its main risks over the next three years. Supplier risks such as losing credit insurance, and economic uncertainty are other issues threatening the business.
The assessment also reviewed the effectiveness of the company’s mitigation actions.
Debenhams has 166 stores in the UK and several franchises overseas, however it has come under pressure amid growing online demand and surging overhead costs. In October, it increased the number of stores earmarked for closure to 50, putting over 4,000 jobs at risk.
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