Debenhams will be closing up to 50 stores over the next three to five years, putting around 4,000 jobs at risk, as it tries to adapt to changes on the UK High Street.

In its preliminary results statement for the year to September, the department store reported a full-year loss of £491.5 million, when exceptional charges relating to its ‘Debenhams Redesigned’ strategy and write-downs from goodwill and store impairment were taken into account.

With exceptional items excluded, underlying pre-tax profit for the period was £33.2 million, compared to £95.2 million in the previous year.

While group like-for-like sales were down 2.3 per cent, group gross transaction value fell by 1.8 per cent to £2.9 billion. The retailer said revenue had been impacted by a volatile and highly competitive market, as well as by weak consumer confidence as shoppers cut back on discretionary spending.

Debenhams stated it will be increasing closure plans for almost a third of its store estate and will develop a new lower-cost approach for around 20 stores.

In September, Debenhams reportedly called in KPMG to draw up a series of contingency plans, including a possible Company Voluntary Arrangement (CVA), after its share price plummet by two thirds since the start of the year.

Chief executive Sergio Bucher admitted it has been a tough year for retail and the financial performance reflects that.

“Working with our new CFO Rachel Osborne, and the board, I am determined to maintain rigorous cost and capital discipline and to prioritise investment to achieve profitable growth,” he stated. “At the same time, we are taking tough decisions on stores where financial performance is likely to deteriorate over time.”

There were some positives in the results however, with digital growth increasing by 16 per cent in the second half of the financial year, continuing to outpace the overall market. Mobile demand grew by around 20 per cent and smartphone conversion rates were up 17 per cent, “supported by our agile development programme driving significant improvements in speed and filtering”.

From February 2019, Debenhams will move desktop customers to the Mobify platform, providing a consistent and scalable experience across all our customer-facing digital channels, the results noted.

“We are building ranges online first so that our largest ‘store’ offers the most exciting and authoritative range and the strongest availability,” read the statement. “We are using online analytics to support range decisions based on customer search behaviour – and this will include the introduction of highly sought after 'hot' brands and products.”

Debenhams also said it is leveraging growth in local mobile search to raise visibility on key products and brands, by working with Google to surface local store information alongside visual shopping ads to drive traffic into stores.

Finally, the department store also has two showcases for the ‘Beauty Hall of the Future’ in a new store in Watford, and a modernised store at Meadowhall.

Harsha Wickremasinghe, head of business intelligence at debt advisory firm Livingstone, said the announcement highlights just how unfit for purpose the department store model is in today's retail environment.

“The embattled retailer has outlined hard-hitting plans to transform itself into a relevant retail entity for the 21st century, but it smacks of desperation and begs the question as to why it has taken so long to address basic issues,” she stated.

“Debenhams sits firmly in the squeezed middle and it's lackluster stores, uninspiring brand mix and poor digital capabilities has left it woefully exposed at a time of intense structural change in retail – this has inevitably enabled more focused competitors to rip chunks out of its soft, bloated underbelly.”

Last month, Debenhams chairman Sir Ian Cheshire warned of a “structural shift” hitting retail business models as shoppers move online – but insisted the department store format was not “dead” and would evolve into a 21st century experience comprising both online channels and physical stores.

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