Struggling high street retailer Debenhams PLC (LON:DEB) is not actively considering a raft of major store closures to help save the business, its chairman said on Tuesday.
The company’s shares lost almost a fifth of their value on Monday morning after weekend reports suggesting it had hired KPMG to explore the possibility of a company voluntary arrangement (CVA), which allows retailers to avoid insolvency or administration by selling or closing unwanted stores and securing lower rents on other properties.
READ: Debenhams confirms it is working with advisers to assess “longer term options”
“The implication of the papers was we were actively driving a CVA with KPMG and it’s simply not true,” the department store group’s chairman Ian Cheshire told BBC radio in an interview.
Cheshire told the BBC that Debenhams was not insolvent and that KPMG, which Debenhams has worked with for three years, had not been retained specifically to undertake a CVA.
British department stores have struggled in recent times with House of Fraser going bust and John Lewis warning on profits.
“We saw this sort of circus develop over the weekend. It’s like having a bunch of nosey neighbours watching your house,” Cheshire said.
“Somebody sees somebody in a suit going into a room, the second person concludes it’s a doctor, the third person concludes it’s an undertaker and by the time you get to the end of the day you’ve got cause of death and everyone’s looking forward to the funeral,” he added.
Debenhams is due to publish its annual results next month, when it expects to report an adjusted pre-tax profit of £33mln and underlying earnings (EBITDA) of £157mln. Net debt is forecast to come in at around £320mln.
The company said on Monday that the early weeks of the new season “have shown more positive trends”.
Shares in Debenhams, which have shed two-thirds of their value so far this year, were 4.6% up at 12.03p in mid-afternoon trade.