industry

Debenhams could close 20 stores THIS YEAR as it enters CRUNCH TALKS with banks


According to a report from the BBC, the department store chain could make the move through a company voluntary arrangement (CVA). This would allow the company to renegotiate its rent payments with landlords and accelerate the closure of shops. The report added the company could be running out of headroom on its £520million borrowing facilities with its banks.

In October, Debenhams revealed it was increasing its store closure plans from 10 to 50 shops over the next three to five years – putting 4,000 jobs at risk.

The company said the 50 stores closing would be those that are the least profiting over this time period, but declined to reveal any further detail over where these might be located.

A spokeswoman said: “I can’t confirm any details around this question and we can’t confirm timing as to when there will be announcements made.”

But a CVA would see that process accelerated with up to 20 shops possibly shut this year.

Debenhams, which has 165 stores and employs around 25,000 people, is expected to update shareholders on its progress within the next few weeks.

The initial plan for the store closures was announced in October when it reported a loss of £491.5 million for the 12 months ending September 30, compared to profits of £59 million the year before.

Sales in its UK business fell 6.3 percent over the year, amid what it described as a “volatile” marks background.

Pressure heightened on the company last month when it announced chairman Sir Ian Cheshire would stand down “with immediate effect”.

Sir Ian, who was appointed to the role in 2016, was voted off the board of the company during the Debenhams annual company meeting.

In a statement, it said: ”Given the decision of two major shareholders who voted against his re-election to the board, Sir Ian has concluded it is no longer possible for him to remain chairman of Debenhams.”

“The board is mindful of its responsibilities to all shareholders and has full confidence in Sergio and in the management’s plan to reshape the business.

“As a result, the board and Sergio have agreed that he should continue as CEO of Debenhams, reporting to the board.

“The board believes that it is in the best interests of Debenhams plc that the executive team remains fully focused on delivery of the plan.

“In the meantime, the board remains open to constructive suggestions from shareholders that are in the interests of the business as a whole.

”The board is committed to delivering the appropriate capital structure to ensure a sustainable and profitable future for all stakeholders.”

Senior Independent Director Terry Duddy became interim director and replaced Sir Ian.



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