Debenhams becomes latest retail chain to consider store closures
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 firstname.lastname@example.org
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