Debenhams to go into liquidation with 12,000 jobs at risk

Debenhams is set to close its 127 stores, putting 12,000 retail jobs at risk, after the collapse of its rescue talks with JD Sports following the news that Arcadia had slipped into administration overnight. 

In a statement this morning, Debenhams’ administrators FRP Advisory said its “sale process has not resulted in a deliverable proposal” and, given the ongoing effects of Covid-19, “the administrators have therefore regretfully concluded that they should commence a wind-down of Debenhams UK, whilst continuing to seek offers for all or parts of the business”.

FRP said that Debenhams stores will continue to trade “to clear its current and contracted stocks” but after that time, should no alternative buyer step forward, the UK business will be closed. Debenhams’ Danish Magasin du Nord business will not be affected. 

A source close to the business said Debenhams would trade through Christmas and, while a closure date is still to be confirmed, said it would likely be in the first quarter of 2021. 

The news comes less than an hour after JD Sports confirmed it had pulled out of talks to take over the struggling department store chain. 

In a note to the City this morning, JD Sports confirmed that “discussions with the administrators of Debenhams regarding a potential acquisition of the UK business have now been terminated”. The end of talks had been triggered by the collapse of Arcadia overnight, which is a major concession partner of Debenhams. 

It is also thought JD Sports boss Peter Cowgill had been put off a potential deal for the ailing department store chain following a steep drop in the retailer’s share price after declaring interest in late November. 

JD Sports had been in exclusive discussion with Debenhams’ administrators and the collapse of talks leaves the 242-year-old chain and its 12,000 employees facing an uncertain future. 

Debenhams has already cut some 6,500 jobs since it fell into administration in early April and without a prospective buyer could end up being liquidated. Hilco Capital has been waiting in the wings to wind the business down since August. 

Mike Ashley, owner of JD Sports rival Frasers Group, had reportedly been interested in acquiring Debenhams, but withdrew from the race to snap up the firm earlier in November after refusing to match the £300m price tag set by Debenhams’ advisers.

There had also been speculation of other interested parties, including The Hut Group, which was understood to have been interested in purchasing Debenhams’ website, as well as Indian giant Reliance Retail, but that has since melted away. 

Since the announcement it had terminated talks with Debenhams administrators, JD Sports’ share price has risen 2.66% and will likely climb further during the day. 

The collapse of talks, however, will be another cruel blow to high street retail given that yesterday’s Arcadia announcement put 13,000 jobs at risk. 

Speaking to the BBC earlier today, former Debenhams chair Ian Cheshire said he felt “desperately sorry” for the department store chain’s 12,000 employees. 

Cheshire also said the group had been “caught in a straitjacket” over long-term leases on non-performing stores, and claimed it had been too slow to pivot to online.