NEWS

12,000 jobs at risk as Debenhams stores set to close

Published on: 2nd December 2020

Debenhams fell into administration for the second time back in April.

Debenhams stores are now set to close as final efforts to rescue the department store chain fall through. Debenhams fell into administration for the second time back in April. Hopes had rested on a rescue bid from JD Sports, who then pulled out of the deal. With all 124 shops likely to close, all 12,000 employees are likely to lose their jobs.

The 12,000 jobs are set to go over the coming months, unless the administrators do a deal for all or parts of the business as the process unfolds. Staff were reportedly given the news on Tuesday morning. This news comes just hours after Topshop owner Arcadia collapsed into administration, putting 13,000 jobs at risk. Tough trading during the coronavirus pandemic, which saw non-essential retail shutter for months, proved to be the final blow for both retail giants.

The collapse of rescue talks is reported to be partly linked to the administration of  Arcadia Group, which is the biggest operator of concessions in Debenhams stores. A supplier told the Guardian that the fate of the two firms was closely linked: “Losing Arcadia was a fatal blow to Debenhams and losing Debenhams was a fatal blow to Arcadia.”

The demise of the department store chain will hit many towns across the UK, as Debenhams department stores are anchor tenants in numerous shopping centres and key attractions on high streets.

Richard Lim, the chief executive of analysis firm Retail Economics, said: “We cannot overstate the significance of this collapse given the vast property portfolio, number of jobs impacted, and the reverberations felt across the industry. The reality is that Debenhams has been outmanoeuvred by more nimble competitors, failed to embrace change and was left with a tiring proposition. The impact of the pandemic has accelerated its demise but underlying issues within the business were the root cause.”

Hilco, the restructuring firm which specialises in winding up retailers, will start going into stores today to begin a massive stock clearance, launching a sale on the day that non-essential shops in England are allowed to reopen for the first time in four weeks.

Meanwhile, the Evening Standard reports that the Debenhams website has been overwhelmed by huge numbers of shoppers searching for bargains. More than 925,000 people were forced to wait to enter the website after a queue system was triggered due to “exceptional demand”.

The sale will put pressure on rival retailers to match the fire-sale prices.

Geoff Rowley of FRP Advisory, joint administrator to Debenhams and partner at FRP, commented: “All reasonable steps were taken to complete a transaction that would secure the future of Debenhams. However, the economic landscape is extremely challenging and, coupled with the uncertainty facing the UK retail industry, a viable deal could not be reached.”

The administrators said the outlook for a restructured operation was “highly uncertain” and they had therefore “regretfully concluded” that they should start winding down Debenhams UK, while continuing to seek offers for all or parts of the business.

The retailer had already cut about 6,500 jobs since May as it struggled to stay afloat. The first store closures are expected in the new year, with all expected to close down by the end of March.

Former Debenhams chairman, Sir Ian Cheshire, has said he feels “desperately sorry” for its employees. He added: “You’ve got to be so much faster and so much more online,” further noting that the chain would have been better off with about 70 stores.

The news will come as a blow to The Entertainer, which had recently brokered a deal to provide toy concessions in Debenhams stores.

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