Some 12,000 Debenhams employees could lose their jobs after talks to buy the struggling department store chain fell through.
The retailer is to wind down the business and close all 124 stores after discussions with JD Sports, which had been negotiating a deal to rescue the firm from the administration, collapsed yesterday.
FRP Advisory, which has acted as an administrator for Debenhams since the spring, said it would continue to seek a buyer while stores remained open to sell off stock. The stores will close permanently if no buyer is found.
It is understood that JD Sports’ decision to pull out of the deal was influenced by Arcadia Group’s collapse into administration. Sir Philip Green’s retail empire’s brands – including Dorothy Perkins, Topshop, and Miss Selfridge – have concessions in Debenhams’ stores.
Joint administrator Geoff Rowley said: “All reasonable steps were taken to complete a transaction that would secure the future of Debenhams. However, the economic landscape is extremely challenging, and, coupled with the uncertainty facing the UK retail industry, a viable deal could not be reached.
“The decision to move forward with a closure program has been carefully assessed and, while we remain hopeful that alternative proposals for the business may yet be received, we deeply regret that circumstances force us to commence this course of action.”
JD Sports confirmed it had pulled out of the deal in a statement to the London Stock Exchange yesterday. Its share price rose 8% on the news.
Former Debenhams chairman Sir Ian Cheshire told the BBC he felt “desperately sorry” for its employees and said it had been “caught in a straitjacket” with too many high street premises on long leases.
“You’ve got to be so much faster and so much more online,” he said.
Dave Gill, national officer at shopworkers’ union Usdaw, called for employers, unions, and governments to work together to save struggling shops.
“There are substantial issues that need to be addressed likes rents, rates, and taxation, to create a level playing field between high streets and online retail. Those issues will not be resolved with ‘sticking plaster’ measures like [this week’s] 24-hour opening government announcement,” he said.
“Retail is crucial to our town and city centers, it employs around three million people across the UK. The government must take this seriously; we need a recovery plan to get the industry back on its feet.”