Debenhams set to close putting 12,000 jobs at risk

Debenhams stores are set to close after the failure of last-ditch efforts to rescue the ailing store chain.

It means all 12,000 employees are likely to lose their jobs when the chain’s 124 shops cease trading.

The news comes just hours after Topshop owner Arcadia fell into administration, putting 13,000 jobs at risk.

Debenhams itself had been in administration since April. Hopes of a rescue were crushed after the last remaining bidder, JD Sports, withdrew.

The 12,000 jobs at the retailer are set to go over the coming months unless the administrators do a deal for all or parts of the business as the process unfolds. 

Staff were told the news on Tuesday morning. 

Debenhams outlets will continue to accept the firm’s store cards and process returns as normal.

Final blow

Hilco, the restructuring firm which specialises in winding up retailers, will start going into stores on Wednesday to begin clearing stock. 

Tough trading during the coronavirus pandemic proved to be the final blow for both Debenhams and Arcadia, which employ more than 25,000 people between them.

Geoff Rowley of FRP Advisory, joint administrator to Debenhams and Partner at FRP, said: “All reasonable steps were taken to complete a transaction that would secure the future of Debenhams. 

“However, the economic landscape is extremely challenging and, coupled with the uncertainty facing the UK retail industry, a viable deal could not be reached.”

With Debenhams to be wound down and Arcadia in administration, this is one of the blackest weeks for the British High Street and one that will have councils around the country pondering the future of their town centres. 

Debenhams, which started as a single shop in central London in 1778, has withstood recessions, depression and world wars, but has succumbed finally to the twin threats of the internet and pandemic shutdowns. 

It has been struggling financially since before the financial crisis – it was owned for several years by a private equity consortium that included Texas Pacific, CVC Capital Partners and Merrill Lynch Global – and returned to the stock market in 2006. Successive financial restructurings have failed to find a winning formula. 

Its former chairman, the veteran retailer Sir Ian Cheshire, told the Today programme this morning that its extensive and expensive property portfolio had been its undoing: no-one can change a department store’s layout and stock as quickly as you can change a website, he said.

In many town centres, Debenhams was one of the few sizeable anchor tenants left after the recent demise of BHS and others. Councillors will now be wondering where their business rates will be coming from, and who will be wanting to visit their High Streets in the absence of big-name retailers. 

They will also fear that this may not be the end of the bad news. If Arcadia were to go the way of Debenhams, it would mean another 13,000 jobs lost.

‘Outmanoeuvred’

The administrators said the outlook for a restructured operation was “highly uncertain” and they had therefore “regretfully concluded” that they should start winding down Debenhams UK, while continuing to seek offers for all or parts of the business.

The 242-year-old retailer had already cut about 6,500 jobs since May as it struggled to stay afloat. 

Richard Lim, chief executive of Retail Economics, said: “We can not overstate the significance of this collapse, given the vast property portfolio, number of jobs impacted and the reverberations felt across the industry. 

“The reality is that Debenhams has been outmanoeuvred by more nimble competitors, failed to embrace change and was left with a tiring proposition. The impact of the pandemic has accelerated its demise, but underlying issues within the business were the root cause.”

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What happens to my orders?

Shoppers are still able to buy items in stores and on the Debenhams website, until all the stock is sold.

This means that anyone who has ordered something on the website, including during Black Friday, should receive it. They should also be able to return these items, under the normal rules, within 14 days, if they do not want them.

The business is also accepting payment cards, such as gift cards. If the business is sold, then these cards may continue to be valid.

However, if cards are unspent or items not delivered if Debenhams closes entirely, then shoppers may need to contact their bank, via the chargeback scheme, or their credit card provider (if they spent more than £100 on a single order) to get a refund.

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‘Caught in a straitjacket’

Julie Palmer, partner at Begbies Traynor, said: “Coming so swiftly on the back of Arcadia’s collapse, today’s news represents a real bleak moment for the High Street. 

“Given how prominently Arcadia brands feature in its stores, the downfall of Sir Philip Green’s empire was always likely to leave Debenhams’ rescue deal hanging by a thread.”

Former Debenhams chairman Sir Ian Cheshire told the BBC he felt “desperately sorry” for its employees.

He said that Debenhams had been “caught in a straitjacket” with too many High Street outlets on long leases.

“You’ve got to be so much faster and so much more online,” he said, adding that the chain would have been better off with about 70 stores.

BBC NEWS

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