KEY POINTS

  • Debenhams said the job losses will primarily impact its U.K. stores and distribution center
  • In April, Debenhams sank into administration (bankruptcy) for the second time in a year
  • USDAW said it was “deeply concerned” that the required consultation processes were not taking place

British department store chain Debenhams said on Tuesday it will cut 2,500 more jobs – on top of the 4,000 job cuts already announced in May – due to the ongoing coronavirus pandemic, BBC reported.

Including the new layoffs, the company will have reduced its total workforce by one-third.

Debenhams said the job losses will primarily impact its U.K. stores and distribution center.

"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,” the company stated. "We have to ensure our store costs are aligned with realistic expectations,”

In April, Debenhams sank into administration (bankruptcy) for the second time in a year as the pandemic badly hurt its business.

At that time, all of its 142 stores in the U.K. were closed although about 124 locales have since been reopened.

BBC reported Debenhams may remain in bankruptcy “for the rest of this year, as lenders wait to see how it performs post-lockdown and in the crucial Christmas [shopping] period.”

The Union of Shop, Distributive and Allied Workers, the trade union representing shopworkers, condemned the job cuts.

The union said it was “deeply concerned” the required consultation processes were not taking place and is planning a legal challenge on behalf of affected union members.

“This is more devastating news for staff who have been working under the threat of store closures and job losses for some time, having seen the company go into administration,” said Dave Gill, USDAW’s national officer. “We have been contacted by members who say they are being made redundant by conference call, with no meaningful consultation or proper notice period, as required by law.”

Gill added: “That is an appalling way to treat staff. Yet again it appears that the taxpayer will have to pick up the bill for what is owed to sacked staff because administrators are deliberately flouting the law. It's absolutely disgraceful that businesses can get away with this sort of tactic.”

Gill urged the administrators to engage with the union for further talks.

Meanwhile, the British Retail Consortium, the trade association for all U.K. retailers, said Monday while many stores have reopened in the country, foot traffic remains depressed.

“July saw the second month of growth as lockdown measures eased and demand gradually began to return in some places,” said Helen Dickinson, chief executive of the consortium. “[But] many shops continued to struggle as footfall was down, with many people still reluctant to go out, and [making] fewer impulse purchases. … Many shops, particularly in fashion, jewelry and beauty, are still struggling to survive.”

Dickinson added that while the rise in retail sales is a step in the right direction, the overall retail industry is “still trying to catch up lost ground, with most stores having suffered months of closures. The fragile economic situation continues to bear down on consumer confidence, with some retailers hanging by only a thread in the face of rising costs and lower sales.”

Paul Martin, U.K. head of retail at KPMG accounting firm, said September will be the “real test” for retailers this quarter, as it is traditionally a month of “high volumes driven by the return to school after the holiday season.”

“That said, with the [government’s] furlough scheme unwinding and wider economic uncertainty set for the autumn, consumer anxiety will likely rise along with it,” Martin added. “This will place more scrutiny on disposable income and make life even tougher for retailers.”