Debenhams to be wound down with 12,000 jobs likely to go
Watch: Debenhams starts liquidation process after Arcadia collapse
Department store Debenhams is to be wound down, leading to the likely loss of 12,000 jobs at the department store.
A spokesperson said the company would be put into liquidation after rescue talks failed. Operations will continue until all stock is cleared, at which point the 242-year-old business will shut for good unless a last minute buyer emerges. All 124 UK stores are set to close.
JD Sports (JD.L) had been involved in exclusive discussions with Debenhams but said in a statement on Tuesday it had ended takeover talks with the department store, which fell into administration in April.
READ MORE: Pressure on Sir Philip Green to fill Arcadia's £350m pension scheme hole
A spokesperson for Debenhams said administrators had “regretfully” decided liquidation was now the only option after a sale process failed to sound out any other potential buyers.
“All reasonable steps were taken to complete a transaction that would secure the future of Debenhams,” said Geoff Rowley of FRP Advisory, joint administrator to 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.”
Labour’s shadow business minister Lucy Powell said the collapse was “devastating news for the 12,000 employees at Debenhams who are facing a very worrying Christmas”. She called on the government to “urgently” set out plans to support staff of Debenhams and Arcadia, another major retailer that went under this week.
Experts said Debenhams’ rescue talks were scuppered by the collapse of Arcadia on Monday night. Arcadia, which owns brands like TopShop and Dorothy Perkins, operates concessions within Debenhams’ department stores. Arcadia’s brands account for an estimated 5% of Debenhams’ revenues and the demise of Arcadia threw significant doubt on Debenhams’ future.
“Given that Arcadia is the biggest concession retailer inside Debenhams, the uncertainty of the change of ownership of the Arcadia brands may also have a significant impact on the latter’s sales too,” analysts at stockbroker Shore Capital wrote.
Shore Capital said Frasers Group (FRAS.L), the retail group owned by Sports Direct billionaire Mike Ashley, could be “potentially looking at acquiring pockets of stock and certain stores.” Analysts said rival department store John Lewis may also look to buy some of Debenhams’ property portfolio.
However, a sale of the business on a going concern basis now looks unlikely, meaning Debenhams will instead be picked over for parts and job losses are almost certain.
“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,” Rowley said.
Debenhams has been struggling for years to adapt to the changing High Street and rise of online shopping. April’s administration marked the second time in a year the department store had entered bankruptcy measures.
Watch: Arcadia group collapses into administration
