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Debenhams kicks off make-or-break year with 19 store closures

Debenhams will begin a make-or-break year with 19 store closures this month that will result in 660 job losses on the UK’s fragile high street.

The struggling department store chain will close the sites in the space of a fortnight as it presses ahead with a rescue plan announced last year. The closures starting on 11 January are spread across the country, from Kirkcaldy in Scotland to Eastbourne on the south coast. This is just the first wave of shutdowns, as the retailer intends to pull down the shutters on a total of 50 of its worst-performing stores.

Debenhams was taken over by a group of financial investors last year and is using an insolvency process known as a company voluntary arrangement (CVA) to cull unprofitable sites and cut the rent on many of its remaining 163 shops. History shows that the retailer will face a tough road to recovery as more than half of all retailers that have resorted to a CVA have gone on to fail.

High street closures in 2019

Thousands of high street jobs have been lost this year as a result of high profile retail administrations and thousands more are at risk as Mothercare, Debenhams and Forever 21 prepare for closures. Here are some of the key industry names that have been affected.

Mothercare: Has 79 stores and 2,500 UK retail staff as its British arm prepares to go into administration.

Regis/Supercuts: Had 220 salons and 1,200 staff when it went into administration in October.

Bonmarché: Had 318 stores and 2,887 employees when it went into administration in October. It is still trading as it seeks a buyer.

Watt Brothers: The Scottish department chain had 11 stores and 306 employees when it went into administration in October. All the stores closed and the majority of jobs have gone.

Links of London: With 35 stores and 350 staff, the jewellery chain went into administration on 8 October but its sites are still trading.

Forever 21: Had three stores and about 290 employees in the UK when it went into administration in September. Stores are staying open in order to clear stock.

Albemarle & Bond: Suddenly shut all its 116 stores in September with the loss of about 400 jobs, even though it did not call in administrators. It sold its pledge books to rival H&T in September.

Karen Millen and Coast: Had 32 stores and 177 concessions, employing 1,100 people, when it went into administration in August. All sites were closed and the vast majority of staff made redundant after the brands were bought out by online specialist

Jack Wills: Had about 100 stores and 1,700 staff in the UK when went into administration in August. Bought by Sports Direct and 98 stores are still trading in the UK and Ireland.

Spudulike: Closed all 37 stores with the loss of about 300 jobs when it went into administration in August.

Bathstore: Had 132 stores and 529 staff when it went into administration in June. Homebase bought 44 stores saving 154 jobs and the brand now trades from 28 stores.

Select: Had 180 stores and 2,000 employees when the fashion retailer went into administration in May. In June administrators at advisory firm Quantuma carried out a CVA closing 11 stores with the loss of about 200 jobs.

Debenhams: Had 166 department stores and more than 25,000 employees when went into administration in April. No store closed immediately and the chain is now owned by its lenders but two will close before Christmas and another 20 in January when the group completes a rescue restructure expected to result in the loss of 1,200 jobs.

Pretty Green: Had 12 stores and about 170 employees when Liam Gallagher’s fashion outlet went into administration in March. All but one store and 33 concessions closed with 100 jobs lost but 67 saved as the brand was bought by JD Sports in April.

Office Outlet: All 94 stores have closed with the loss of 1,170 jobs after the stationery retailer went into administration in March.

LK Bennett: Had 41 stores and 500 employees when it went into administration in March. The brand was bought by its Chinese franchise partner, Rebecca Feng, saving 21 stores, all the group’s concessions and 325 jobs. But more than 100 jobs lost with the closure of 15 stores.

Patisserie Valerie: Had 200 cafes employing nearly 3,000 people when an accounting scandal prompted the chain to call in administrators in January. About 70 of the group’s 200 stores closed immediately with the loss of 900 jobs. About 2,000 jobs were saved when about 100 Patisserie Valerie cafes were rescued by Causeway Capital, more than 20 of which have since closed. 21 Philpotts sandwich shops were bought by AF Blakemore & Son. and four Baker & Spice cafes a were bought by the Department of Coffee & Social Affairs. Sarah Butler

A recent report highlighted that UK high streets shed more than 140,000 jobs in 2019 due to store closures and cost cutting as the high suffered at the expense of the shift to online shopping. The problems of department stores reflect this upheaval. As more people buy goods on their phones or laptops, the number of visitors to high streets is falling just as the cost of running large stores is rising. Shoppers have also reined in spending on clothing and household goods due to the squeeze on spare cash and a shift towards renting rather than owning homes.

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The 19 stores on Debenhams closure list add up to about 1.3m sq ft or roughly a tenth of Debenhams 14.3m sq ft of retail floor space, according to analysts at Radius Data Exchange.

James Child, the head of retail and industrial research at commercial property magazine EG, said department stores were faced with “perilous headwinds”.

“They having the USP of selling everything, but figuring out how to sell that concept to shoppers when they can access everything online is a huge test,” he said.

Debenhams is not the only department store chain in trouble, with even the mighty John Lewis struggling to adapt to new shopping habits. The employee-owned department store chain made a loss in the first half of its financial year and the weekly sales update published before Christmas point to challenging trading conditions.

The future also looks difficult for House of Fraser which is now part of Mike Ashley’s listed retail empire Frasers. At the end of last year the maverick businessman set the scene for retrenchment, pointing the finger at business rates and stating: “We cannot keep loss-making stores open”. Seven stores have closed since Ashley bought it in 2018, leaving 52 branches, but property industry sources suggest the chain will halve in size.

Richard Hyman, the independent retail analyst, predicted that 2020 would be a defining year for many retailers. “Debenhams and House of Fraser will not end this year in the shape they are in today; at best they will be much smaller and at worst they won’t exist at all.” He suggested the owners of Debenhams – a consortium of banks and hedge funds – had delayed facing the grim reality: “In a way it has become a zombie.”

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Debenhams said job losses from this first major round of closures were lower than originally anticipated and it was hopeful some staff could be redeployed. Three stores: York, Haverfordwest and Orpington closed at the end of 2019 but the main group will close in three stages, beginning next Saturday.

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The Debenhams chief executive, Stefaan Vansteenkiste, said: “We are working hard to implement the transformation of Debenhams. Despite a challenging retail environment, thanks to our colleagues’ hard work and our investor group’s commitment we are progressing with our turnaround.”

Debenhams has recently recruited experienced retail executives, including Mark Gifford, a former finance director of House of Fraser, as chairman and former Argos boss John Walden, to its board.

It was reported last month that Debenhams had approached landlords for fresh rent cuts. It is thought the outcome of these talks will determine the fate of other stores destined to close. Guildford and Staines, both in Surrey, which were on the original list announced last April, are staying open for the time being. The aim is still to close a total of 50 stores but after this month no more are planned until 2021.

The closures come as high street chains prepare to update the City on the important Christmas trading period when many retailers make most of their profits. Last year’s rescue deal means Debenhams is no longer listed on the stock exchange so does not have to publish any financial information. Its well-publicised woes would have knocked confidence in the brand but trade, in its stores anyway, is thought to have held up well in the run up to Christmas.

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