Debenhams falls in retail carnage hours after Topshop owners topple into administration
Closures: A woman walks past a Debenhams store
(REUTERS)The Christmas crisis on the high street deepened dramatically today as Debenhams warned that all of its 124 department stores are set to shut.
The 242-year-old retailer effectively threw in the towel on its long battle for survival, a day after Sir Philip Green’s Arcadia group slumped into administration.
The almost certain demise of one of Britain’s oldest high street names puts a further 12,000 jobs at risk, bringing the total number of roles on the line across the two businesses at 25,000.
The latest meltdown comes as stores across the West End scrambled to reopen to make the most of the last three weeks of Christmas trading at the end of disastrous year when most stores were forced shut for 17 weeks over two lockdowns to stop the spread of coronavirus.
In a bleak statement Debenhams said its administrators, FRP Advisory, have concluded that efforts to sell the business “has not resulted in a deliverable proposal”.
It continued: “Given the current trading environment and the likely prolonged effects of the pandemic, the outlook for a restructured operation is highly uncertain.
“The administrators have regretfully concluded that they should commence a wind-down of Debenhams UK, whilst continuing to seek offers for all or parts of the business.
“It will continue to trade through its 124 UK stores and online to clear its current and contracted stocks. On conclusion of this process, if no alternative offers have been received, the operations will close.”
Geoff Rowley, of FRP Advisory, said: “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 decision to move forward with a closure programme has been carefully assessed and, while we remain hopeful that alternative proposals for the business may yet be received, we deeply regret that circumstances force us to commence this course of action.” The statement was rushed out just half an hour after fellow retailer JD Sports walked away from a potential rescue takeover of Debenhams.
The failure of Arcadia effectively signed the death warrant for Debenhams as it is the biggest sin gle holder of concessions in Debenhams stores and accounts of about £75 million in its sales.
It comes a month before stores across the UK are hit by another hammer blow with the end of VAT-free shopping for foreign visitors on January 1.
Jace Tyrrell, chief executive of New West End Company, said the abolition of the 20 per cent discount had the potential to do more damage to retail than “Covid and Brexit combined”, adding: “Rishi Sunak is literally writing a P45 to 40,000 people.”
Mayor Sadiq Khan said: “Millions of pounds is spent on VAT-free shopping every year. As we recover from this pandemic, this is cash struggling retailers will need more than ever before.”
Tim Vallance, head of investor services and retail chairman of property consultants JLL, said: “Covid has simply accelerated the shift to online shopping.”
However, retail bosses expect a frenzied return to stores over December for pre-Christmas shopping sprees.
Restaurateurs and hospitality leaders were also gearing up for the return of diners when Tier 2 regulations replace lockdown at one-minute-past midnight tonight.
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