Debenhams chairman hits out over ‘nosy neighbours’
THE Debenhams chairman has lashed out at speculation over the struggling retailer’s future, insisting that the chain is not insolvent.
Sir Ian Cheshire said that it is “simply not true” that the firm is actively embarking on a company voluntary agreement (CVA), a controversial insolvency procedure used by struggling firms to shut under-performing shops.
The comments come a day after Debenhams shares plunged as much as 17% after it emerged that KPMG had been drafted in to help Debenhams consider its options.
Sir Ian also hit out at “nosy neighbours” speculating on Debenhams’ future and described speculation about the department store chain as a “circus”.
“The only analogy I can have to it is like having a bunch of nosy neighbours watching your house. Somebody sees somebody in a suit going into a room.
“The second person concludes it’s a doctor, the third person concludes it’s an undertaker and by the time it gets to the end of the day you’ve got cause of death and everyone’s looking forward to the funeral,” he told BBC Radio 4’s Today programme.
However, he also admitted the struggling retailer is considering all options with KPMG.
Debenhams is looking at “every option in the longer term”, he said, adding: “If that’s the right thing for the company and our broader stakeholders then obviously that’s an option, but the implication was we were about to do it and that... trading had somehow collapsed.”
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.
Debenhams was forced to issue a trading update on Monday saying it expects full-year pre-tax profits of around £33m before exceptional items, which is within the current market range of £31m-£36.5m.
Underlying earnings are forecast to come in at £157m, with net debt of approximately £320m.
Debenhams also assured that it has continued to strengthen its financial position to ensure flexibility amid “volatile market trading conditions”.
Debenhams last month said it would swing the axe on up to 90 staff at its fashion and home departments as part of a major cost-cutting drive.
In January it announced plans to ramp up efficiency savings, with another £10m earmarked for this financial year and £20m extra annually.
Chief executive Sergio Bucher, who is leading the shake-up, then went on to slash 320 store management roles in February.
In June, Debenhams issued its third profit warning this year as trading came in “below plan”.
To compound matters, Debenhams is also the subject of takeover talk, with speculation building that Mike Ashley is set to merge it with his newly acquired House of Fraser.
Mr Ashley owns just under 30% of Debenhams, close to the threshold at which he must launch an official takeover bid.