Debenhams set to plunge into administration
DEBENHAMS is on the brink of collapsing into administration for the second time in a year, putting thousands of jobs at risk.
The ailing department store chain has confirmed it has filed a notice of intent to appoint an administrator, casting doubt on the future of its 22,000 employees, including stores in Cardiff, Newport and Swansea.
The current owners have furloughed the majority of its 22,000 staff – and reportedly placed global auditing firm KPMG on standby to handle the administration process last week.
Now the company is reportedly planning to push the business into administration, then buy it back debt-free.
The group says it is preparing to enter a “light touch” administration that will see the existing management team remain in place under the direct control and supervision of the administrators.
Debenhams said in a statement: “This move will protect Debenhams from the threat of legal action that could have the effect of pushing the business into liquidation while its 142 UK stores remain closed in line with the Government’s current advice regarding the Covid-19 pandemic.”
The company added it is making preparations to open again once Government restrictions are lifted – but it is not known when the Bristol store will reopen, or what its future holds.
The majority of its employees in the UK are currently being paid under the Government’s furlough scheme, after its stores closed following the shutdown of non-essential shops.
Debenhams added that it continues to trade online across the UK, Ireland and Denmark, and customer orders, gift cards and returns are being accepted and processed normally.
The retailer also said it has the support of its lenders to enter administration and is engaging with employees and suppliers over the move.
Andy Barr co-founder of product tracking website Alertr said: “Debenhams has always had such a huge presence on the high street but it still felt inevitable that they were going to be one of the retailers who got hit hard by dwindling interest from consumers.
“Department stores have struggled to keep up with cheaper, online alternatives for years now and the current climate could well be the final nail in the coffin.
He added: “Every business needs to be willing to adapt to the changing needs of the consumer and they need to do so quickly, that being said, it could well be too late for the department store giant.
“Although, they are still actively trading online, it does seem a matter of when, and not if, we see the end of Debenhams.”