DEBENHAMS COULD CULL 14,000
‘Last resort’ for chain would be biggest blow to high street yet
ArOUND 14,000 jobs could be on the brink at struggling department store Debenhams.
Plans to liquidate the business are being drawn up in case other options for saving the company – such as selling it – fall through.
If the ailing department store chain collapses – and all 14,000 jobs are lost – it would be the single biggest cull of the coronavirus crisis.
This would bring the total number of potential UK job losses to more than 150,000 since the pandemic began – adding to misery hitting firms from virgin Atlantic to NatWest, British Gasowner Centrica and luxury car maker Aston Martin.
British Airways has so far announced the largest cull, signalling that it may have to cut as many as 12,000.
Debenhams’ hedge fund owners have brought in a group called Hilco Capital, which specialises in winding up retailers, to put together a series of ‘contingency plans’. The clock is ticking for Debenhams, which has 124 stores across the UK, as its owners want to sell it by the end of next month.
Although Debenhams is a stalwart on Britain’s high streets, the firm has been in financial turmoil for several years.
It has been in administration since April – when it became one of the first retail casualties of the coronavirus crisis, which led to an abrupt halt in shop trading. Earlier this week it announced it was axing 2,500 more jobs – after cutting around 4,000 earlier in the year.
However, even if Debenhams’ owners don’t find a buyer soon there are other options on the table, such as the current owners taking it out of administration or bringing on new investors.
A source close to the 242-yearold retailer said liquidation was still a last resort and that the administrators were required to have a group such as Hilco on standby in case other options ‘do not materialise’. The company was making enough cash, a source said, and had a big enough stock of clothing to see it through until after Christmas. When Debenhams went bust in April it was the second time this had happened to the firm in a year. It had been listed on the London Stock Exchange until last spring, when a heated row between management and the owner of Sports Direct and Newcastle United, Mike Ashley, came to a head. It was placed into administration after Mr Ashley tried to engineer his way on to the company’s board.
By going bust, the investments of all shareholders, including Ashley, were completely wiped out. But he is now rumoured to be eyeing up to 30 stores.
Another high street brand, Next, and a Chinese group are also thought to be planning to pounce on parts of the company.
A spokesman said: ‘Debenhams is trading strongly with 124 stores reopened and a healthy cash position. As a result, and as previously stated, the administrators of Debenhams retail have initiated a process to assess ways for the business to exit its protective administration. The administrators have appointed advisers to help them assess the full range of possible outcomes.’
The likes of Laura Ashley, Cath Kidston and Oasis are among the other big-name brands that have collapsed this year.
‘The clock is ticking’