Connect with us

Hi, what are you looking for?

Investing

Debenhams may close up to 60 stores, putting thousands of jobs at risk

Debenhams

Up to 60 Debenhams shops could close next year, putting thousands of jobs at risk, as part of a rescue deal for the beleaguered department store group.

Shares in JD Sports fell more than 6% on Tuesday after it emerged the company was in exclusive talks to buy Debenhams, in a move that would take the sports and casual wear group into a tough new market.

JD is thought to be mainly interested in the Debenhams website but analysts also believe it could take on almost half the group’s 124 outlets. That would be in line with a restructuring plan set out by the owners of Debenhams in a pack for potential buyers, under which the business set out the possible closure of between 20 and 60 stores over time.

While other retailers – including John Lewis, Next and Marks & Spencer – may be interested in a limited number of the unwanted Debenhams outlets, the possible closures would put thousands of jobs at risk at the group, which employs 12,000 people.

Debenhams has been considering a potential sale since the summer after going into administration in April, for the second time in a year.

A deal could be announced before Christmas, but any decision on store closures and related job cuts is not likely to come until after the festive trading peak.

Analysts and industry insiders expressed surprise that JD would want to take on a vast amount of high street space when shoppers were increasingly switching online. JD has a significant high street presence, operating its core sports chain as well as the fashion retailer Scotts and the outdoor wear businesses Blacks Leisure and Millets.

A deal may not materialise. Other potentially interested parties, including the online specialist The Hut Group, which is understood to have been interested in the website only, and India’s Reliance Retail, appear to have melted away. Offers from Debenhams’ most persistent suitor, Mike Ashley’s Frasers Group, have so far fallen far short of its owners’ hopes.

If JD did secure a deal, it’s thought it would need to either split up stores or partner with other businesses that have expertise in beauty, catering, homewares and other kinds of goods sold in department stores to make the deal work.

“It’s difficult to see how JD would fill that space,” said one industry insider.

One analyst pointed out that JD would have to spend heavily to improve the look of stores and that the venture was unlikely to go down well with investors.

However, Greg Lawless, an analyst at the stockbroker Shore Capital, said Debenhams was a market leader in premium beauty, owned some decent fashion brands, including Maine and Mantaray, and could be much more efficiently run by JD. He added that the business was likely to contain as much as £500m of stock ahead of Christmas, giving it assets well above the asking price.

While the potential deal carried execution risk, Lawless said that as a “best-in-class” retailer JD would “be able to operate the Debenhams fascia much more efficiently and potentially harvest significant margin opportunities”.

Another motivation for JD’s boss, Peter Cowgill, might be to foil or raise the price of any takeover of Debenhams by Mike Ashley’s Frasers Group, which owns its key rival Sports Direct as well as the designer fashion chain Flannels and department store House of Fraser.

Ashley has made no secret of his desire to control Debenhams, where he spent £150m building a stake when it was a listed company only to see that wiped out in a debt restructuring deal with the department store’s lenders.

Frasers was due to hold talks about about a potential deal on Monday before exclusivity with JD was agreed. Ashley is thought to have been offering only about half the minimum £300m price tag its advisers are seeking.

Read more:
Debenhams may close up to 60 stores, putting thousands of jobs at risk

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!

Latest

Economy

MORE than half of students in the Philippines consider temporarily dropping out of school until the coronavirus pandemic ends mainly due to difficulties in...

Economy

The Public Works department has ramped up the completion of projects such as the Sta. Monica-Lawton Bridge also known as the Kalayaan Bridge. —...

Economy

THE BUREAU of the Treasury (BTr) raised its planned borrowings from the local market to P235 billion in July, as it seeks to offer...

Economy

By Jenina P. Ibañez, Reporter MANILA is the 78th most expensive city for expatriates to live in according to Mercer’s 2021 Cost of Living...

Economy

LOCAL GOVERNMENT UNITS (LGUs) could boost their real property tax (RPT) collection by P113.4 billion with the implementation of a project that will digitize...

Economy

THE Department of Energy (DoE) has ordered National Grid Corp. of the Philippines (NGCP) to speed up the acquisition of the required ancillary services...

You May Also Like

Investing

Having a good Instagram marketing agency to back up your Instagram account is an absolute must going into the new year. With competition stronger...

Investing

As a traditionally rigid insurance industry becomes bogged down by antiquated processes and operations, a handful of industry leaders are seeking to shake things...

Economy

US President Joseph R. Biden, Jr., will rely on ally countries to supply the bulk of the metals needed to build electric vehicles and focus on...

Economy

THE Securities and Exchange Commission (SEC) has warned the public from investing or to stop any investment in a group named Maxxprofit Computer Trading...

Disclaimer: SmartRetirementReport.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.



Your information is secure and your privacy is protected. By opting in you agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!