logo-loader

Debenhams to close 22 stores next year as part of CVA plan

Published: 15:21 26 Apr 2019 BST

debenhams
Around 1,200 staff are expected to be affected by the closures

Debenhams Group will close up to 22 of its UK department stores next year and more in coming years, if a new restructuring proposal is accepted.

After being put into administration and taken over by its creditors earlier in April, the group revealed plans for a two-part company voluntary arrangement on Friday, which would keep all stores trading at least until January 2020. The group has 166 department stores in total, though its 11 stores in the Republic of Ireland are not affected by the CVA proposal.

The CVA process, which needs to be given the green light by at least half of unconnected creditors at a meeting planned for 9 May, will also involve rent reductions and lease changes on other stores. 

As part of a wider restructuring and turnaround plan, creditors recently provided £200m of fresh liquidity and have committed to equitise £100m of debt, though this will still not result in any value recovery for shareholders of the collapsed Debenhams PLC.

“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,” said executive chairman Terry Duddy in a statement on Friday.

Debenhams said the CVA was only seeking to revise terms with of certain landlords and local authorities, stressing that all trade suppliers and the entitlements of employees will continue to be paid in full during the process.

Of the listed UK real estate investment trusts, Intu Properties PLC (LON:INTU) had eight Debenhams stores on its books before the administration, British Land Company PLC (LON:BLND) is thought to have four, Hammerson PLC (LON:HMSO) six stores and Land Securities Group PLC (LON:LAND) three, according to data from Datscha. RDI Reit PLC (LON:RDI) and NewRiver REIT plc (LON:NRR) both own shopping centres with store space leased to Debs, while Aviva (LON:AV.) and Prudential PLC's (LON:PRU) M&G Investments have exposure to three stores leased to Debenhams.

Around 1,200 staff are expected to be affected by the store closures in 2020, with Altrincham, Ashford, Birmingham Fort, Canterbury, Chatham, Eastbourne, Folkestone, Great Yarmouth, Guildford, Kirkcaldy, Orpington, Slough, Southport, Southsea, Staines, Stockton, Walton, Wandsworth, Welwyn Garden City, Wimbledon, Witney, Wolverhampton all on the chopping block.

For retailers remaining in the apparel sector, analysts expect the withdrawal of store 'capacity' from Debenhams as well as the likes of House of Fraser, New Look, Monsoon and Top Shop owner Arcadia, will be a major boon.

FTSE rises ahead of Easter weekend, JD Sport gains on upbeat outlook -...

The FTSE 100 gained on the final morning of this shortened Easter trading week. Festive cheer was limited though, as Thames Water confirmed shareholders would not provide it with a £500 million rescue package, prompting speculation over the London supplier’s future. On a more positive...

36 minutes ago