Dismal Debenhams names the 22 stores to close
Debenhams has named 22 of the 50 stores it plans to close as part of a plan by new owners to revive the department store chain. The retailer says the store closures will start next year and 1,200 staff will be affected by the first phase.
Stores in Canterbury, Guildford, Wolverhampton and Kirkcaldy are among those earmarked for closure. Earlier this month lenders to Debenhams took control in a deal which wiped out the investments of shareholders.
Once the 50 store closures are complete Debenhams will have around 116 stores in the UK.
Debenhams also reported results for the 26 weeks to March. Sales at its UK stores fell 7.4%, which it blamed on fewer shoppers heading to the High Street.
Debenhams is the UK’s biggest department store chain and its origins can be traced back to 1778, and a drapers store in central London.
However, industry experts said the retailer expanded the number of its stores at the wrong time – in the 2000s when customers were switching to online sales.
The expansion left the company with debts and expensive leases.
The firm’s financial situation deteriorated and last month Debenhams agreed a deal with its lenders, who provided £200m of fresh funding.
Those lenders then took control of Debenhams earlier this month by buying it out of administration.
That deal wiped out the investments of shareholders, including the stake of Mike Ashley, the founder of Sports Direct.
Mr Ashley had wanted to buy Debenhams and become chief executive, but his approaches were turned down.
The new owners have now announced their store closure programme under a process known as a Company Voluntary Arrangement (CVA), which also allows them to renegotiate rents at stores that remain open.
Of the department stores which remain open, 39 will stick to their current rental rates for the duration of their leases.
For the other stores the company is aiming to secure rental reductions of between 25% and 50%.
Terry Duddy, Debenhams executive chairman, said: “Debenhams has a clear strategy and a bright future, but in order for the business to prosper, we need to restructure the group’s store portfolio and its balance sheet, which are not appropriate for today’s much changed retail environment.
“Our priority is to save as many stores and as many jobs as we can, while making the business fit for the future.”
Debenhams is just one of many High Street chains to run into trouble in recent years.
The collapse of BHS in 2016 resulted in more than 160 stores closing, and House of Fraser has been shutting stores after being bought out of administration last year. Marks and Spencer is in the process of closing 100 stores by 2020.