Debenhams shares plunge after KPMG called in to help
DEBENHAMS shares plunged 17% in early trading yesterday after KPMG was called in to help draft emergency plans to save the troubled retailer.
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.
If Debenhams goes 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 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.