Deben­hams be­comes lat­est re­tail chain to con­sider store clo­sures

Belfast Telegraph - Business Telegraph - - Front Page - BY MAR­GARET CAN­NING

DE­PART­MENT store gi­ant Deben­hams, which has five shops here, has be­come the lat­est re­tailer to take steps to­wards clo­sures.

The com­pany has con­firmed it is con­sult­ing ac­coun­tants over plans for the fu­ture, which may in­clude store clo­sures.

How­ever, it had no fur­ther de­tails on whether its five North­ern Ire­land units will be af­fected. While it has suf­fered fall­ing sales in re­cent years, it has been a trail­blazer for de­part­ment store fash­ion as one of the first to in­tro­duce ranges by de­sign­ers aimed at high street shop­pers.

This year, ac­tress and Os­car-win­ning writer Rachel Shen­ton be­came the face of dresses sold in Deben­hams by de­signer Richard Quinn.

DE­PART­MENT store chain Deben­hams, which has five shops and around 300 staff in North­ern Ire­land, may con­sider clos­ing some of its stores after call­ing in ac­coun­tants to as­sess its op­tions.

The move to in­struct KPMG to help draft emer­gency plans to se­cure its fu­ture is an­other po­ten­tial blow to re­tail here.

Deben­hams is the an­chor ten­ant in Belfast’s Castle­court shop­ping cen­tre, yards away from the scene of the Pri­mark fire, which gut­ted the his­toric Bank Build­ings two weeks ago.

But it is just out­side a cor­don which has taped off a to­tal of 14 traders close to Pri­mark, though fash­ion chain re­tailer DV8 is mov­ing to a tem­po­rary unit in Castle­court from its Cas­tle Place home.

Deben­hams is also a ma­jor trader in Newry’s Quays shop­ping cen­tre, Craigavon’s Rush­mere, Bal­ly­mena’s Fairhill and in Lon­don­derry’s Foyle­side.

Shares plunged 17% after KPMG was called in to help draft emer­gency plans to save the trou­bled re­tailer.

But Deben­hams said: “We have no an­nounce­ments to make on any store clo­sures in our es­tate.

“Like all com­pa­nies, Deben­hams fre­quently works with dif­fer­ent ad­vis­ers on var­i­ous projects in the nor­mal course of busi­ness.”

The de­part­ment store is said to be con­sid­er­ing a list of op­tions in­clud­ing a com­pany vol­un­tary agree­ment (CVA), a con­tro­ver­sial in­sol­vency pro­ce­dure used by strug­gling firms to shut un­der-per­form­ing shops.

The com­pany has brought in KPMG to help draw up the turn­around plans, ac­cord­ing to the Sun­day Tele­graph, which first re­ported the news.

If Deben­hams charges ahead with a CVA, it would join a raft of re­tail­ers in­clud­ing New Look, Car­petright and Mother­care, who have opted for the re­struc­tur­ing tool de­spite anger from land­lords who have ar­gued it leaves them out of pocket.

House of Fraser — the an­chor ten­ant in Vic­to­ria Square shop­ping cen­tre — planned to en­ter a CVA ear­lier this year but was then sold to Sports Di­rect ty­coon Mike Ash­ley.

The news sent shares down more than 17%.

Deben­hams later is­sued a trad­ing up­date in re­ac­tion to me­dia re­ports, say­ing it ex­pects full-year pre-tax prof­its of around £33m be­fore ex­cep­tional items, which is within the cur­rent mar­ket range of £31m to £36.5m.

Un­der­ly­ing earn­ings are fore­cast to come in at £157m.

Net debt is to be ap­prox­i­mately £320m.

Deben­hams has made as­sur­ances that it has con­tin­ued to strengthen its fi­nan­cial po­si­tion to en­sure flex­i­bil­ity amid “volatile mar­ket trad­ing con­di­tions”.

Chief ex­ec­u­tive Ser­gio Bucher said: “The mar­ket en­vi­ron­ment re­mains challenging and un­der­ly­ing trends de­te­ri­o­rated through the sum­mer months.

“Nev­er­the­less the prod­uct and for­mat im­prove­ments we have tested are gain­ing trac­tion and we are ready to scale up some of our strate­gic ac­tiv­ity ahead of peak (sell­ing season).

“Having put in place a leaner op­er­a­tional struc­ture and strong lead­er­ship team, and taken ac­tion to strengthen our fi­nan­cial po­si­tion, we are well equipped to nav­i­gate these mar­ket con­di­tions and take ad­van­tage of any trad­ing op­por­tu­ni­ties that emerge,” he added.

Chair­man Ian Cheshire re­it­er­ated that the board is con­tin­u­ing to work with its ad­vis­ers “on longer term op­tions”.

BELFAST’S for­mer Crum­lin Road Court­house is now a step closer to be­ing trans­formed into a new ho­tel.

Plan­ning of­fi­cials will tonight ask Belfast City Coun­cil’s plan­ning com­mit­tee to sign off on their rec­om­men­da­tion to grant both plan­ning per­mis­sion and listed build­ing con­sent, in­clud­ing a new roof ex­ten­sion, for the his­toric north Belfast build­ing.

The old court­house is ex­pected to be­come Liver­pool-based de­vel­oper Lawrence Ken­wright’s third ho­tel in the city.

The di­rec­tor of Sig­na­ture Liv­ing is cur­rently trans­form­ing the old Scot­tish Mu­tual Build­ing, next to Belfast City Hall, into the new Ge­orge Best Ho­tel.

Mr Ken­wright is also press­ing ahead with an­other ho­tel in the Cathe­dral Quar­ter, on the site of the for­mer war me­mo­rial mu­seum on War­ing Street.

Mean­while, plan­ning of­fi­cials at Belfast City Coun­cil have said that four ma­jor ap­pli­ca­tions, in­clud­ing a bid for a ma­jor ho­tel, which were re­viewed in the wake of a High Court rul­ing, should still go ahead.

The plans were re-ex­am­ined after Mr Jus­tice Mc­closkey found in May that the de­ci­sion to ap­prove a £55m of­fice block be­side an in­ner city hous­ing dis­trict, was un­law­ful.

The judge said that plan­ning of­fi­cials had failed to take rel­e­vant con­sid­er­a­tions into ac­count when they granted per­mis­sion for a de­vel­op­ment up to 14 storeys high in the his­toric Mar­kets area of Belfast.

The suc­cess­ful ju­di­cial re­view, mounted by res­i­dents of the Mar­kets, cen­tred around the le­gal sta­tus of the Belfast Metropoli­tan Plan (BMAP).

It found that a separate le­gal case con­nected to BMAP had re­sulted in the plan be­ing left in draft form, with the older Belfast Ur­ban Area Plan (BUAP) be­com­ing the statu­tory plan.

It prompted city plan­ning of­fi­cials to reap­praise four other ma­jor de­ci­sions.

They in­cluded a 250 bed­room ho­tel strad­dling Cor­po­ra­tion Street and Tomb Street, an 11-storey apart­ment block in Lit­tle Patrick Street, a ma­jor res­i­den­tial de­vel­op­ment on Stock­man’s Way, and an ap­pli­ca­tion to de­mol­ish the Movie House cin­ema on Dublin Road, to make way for a new 12 storey of­fice build­ing, also known as Bankmore Square.

In four separate re­ports due to go be­fore Belfast City Coun­cil’s plan­ning com­mit­tee this evening, of­fi­cials have rec­om­mended that their ini­tial de­ci­sion to ap­prove be reaf­firmed.

An es­sen­tial el­e­ment to any con­tract is cer­tainty of terms. A re­cent case in the Court of Ap­peal, Robert Bou-si­mon v BGC Bro­kers LP, high­lighted the risks once again where terms to a con­tract were not clearly recorded in writ­ten doc­u­men­ta­tion be­tween the con­tracted par­ties.

Mr Bou-si­mon was em­ployed as a bro­ker with BGC. As part of this ar­range­ment Mr Bou-si­mon signed a loan agree­ment with his em­ploy­ers where they lent him £336,000 payable to him within 30 days of him be­com­ing a part­ner or within 30 days of the agree­ment be­ing signed, which­ever was the later.

The agree­ment fur­ther pro­vided that the loan was to be re­paid from his net part­ner­ship dis­tri­bu­tions and that if he ceased to be a part­ner after having served a full ini­tial term (four years) any un­paid amounts would be writ­ten off.

It was the in­ten­tion of the par­ties that Mr Bou-si­mon would be­come a part­ner but this didn’t hap­pen be­cause the nec­es­sary doc­u­men­ta­tion wasn’t signed.

Mr Bou-si­mon re­ceived his £336,000 on Fe­bru­ary 12, 2012 and re­signed on June 3, 2013. BGC sued for the re­turn of the monies and lost in the Court of Ap­peal.

The court stated that it can­not im­ply a term into a con­tract be­cause it seems fair or be­cause the par­ties would have agreed to it had it been sug­gested to them. It is nec­es­sary to con­strue the ex­press terms of the con­tract be­fore con­sid­er­ing whether a term should be im­plied. The ex­press terms of the agree­ment dealt with a loan be­ing made to a part­ner. The sit­u­a­tion which arose whereby Mr Bou-si­mon didn’t be­come a part­ner was not cov­ered by the scope of the agree­ment.

The court’s strict ap­proach in this case may seem harsh but it is a re­minder of the im­por­tance of doc­u­ment­ing your con­trac­tual terms and having these clearly stated.

It is risky to as­sume that be­cause you are on good terms with a con­tract­ing party and have a sat­is­fac­tory and pro­duc­tive work­ing re­la­tion­ship with them, that you don’t need to for­mally record terms.

If you want to re­duce risk and en­sure cer­tainty, ac­cu­rately record the terms in writ­ing and seek le­gal ad­vice where ap­pro­pri­ate to en­sure the terms are ro­bust and legally en­force­able.

Celia Wor­thing­ton is a con­sul­tant in the Com­mer­cial De­part­ment of Wor­thing­tons Solic­i­tors Belfast Of­fice. Celia reg­u­larly ad­vises cor­po­rate and char­ity clients on the draft­ing and en­force­ment of con­trac­tual agree­ments. Celia can be con­tacted on 02890434015 or celia@wor­thing­ton­

Ac­tress Rachel Shen­ton be­came the face of Richard Quinn de­signs sold by Deben­hams

The for­mer Crum­lin Road Court­house, which could be turned into a ho­tel

Cer­tainty of terms is im­por­tant when sign­ing a con­tract

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