Debenhams ‘closures’ fuel job loss concerns
DEPARTMENT store chain Debenhams is reportedly drawing up plans to close 90 stores, with a potential loss of 10,000 jobs.
The beleaguered retailer, which has 165 sites in the UK – including shops in Cardiff, Merthyr Tydfil, Newport, Swansea, Llanelli, Carmarthen and Haverfordwest – has previously said it had plans to axe 50 stores.
But the Telegraph yesterday reported the latest plans will see 90 stores close.
On Friday shares in Debenhams collapsed following the removal of the retailer’s chairman and chief executive by Mike Ashley a day earlier.
The retail tycoon, who owns just under 30% of the department store chain through Sports Direct, teamed up with fellow shareholder Landmark to eject Sir Ian Cheshire and Sergio Bucher from the board.
Following the Debenhams annual meeting on Thursday, Mr Cheshire stepped down as chairman immediately, but Mr Bucher will stay on as chief executive, although not as a director.
Mr Cheshire’s and Mr Bucher’s reelections to the board were rejected by 56.62% and 55.85% of votes cast respectively.
Shares were down over 17% at 3.9p on Friday as investors reacted to the news.
It comes amid growing concern for the retailer’s future as it struggles with poor trading, a £500m debt mountain and onerous lease obligations.
It is widely expected that Mr Ashley, who acquired House of Fraser last year, will also look to pounce on Debenhams when he feels the time is right.
Last month Mr Ashley made public details of a £40m loan he offered to Debenhams, but which the firm rejected.
In the meantime, Terry Duddy has been appointed interim chairman to replace Mr Cheshire.
Caroline Gulliver, analyst at Jefferies, said: “Both Cheshire and Duddy have extensive UK retail experience, including managing through a recession, and yet they’ve not been able to help Debenhams (so far) avoid this increasingly special situation.
“Constructive discussions with lenders had started before Christmas and we believe all options are being considered (maybe different types of lenders and/or an equity rights issue).”
On Thursday, the struggling department store unveiled declining sales over Christmas.
Debenhams said like-for-like sales dipped by 3.4% in the six weeks to January 5, weighed down by the UK where sales were 3.6% lower due to weaker footfall.