High street retailer has announced it is going in to administration, putting thousands of jobs at risk.
Around 22,000 jobs could be lost as the fashion brand blames the ‘unprecedented circumstances’ of the coronavirus crisis on a sharp downturn in trade.
News that the store could go into administration was first announced on Monday, now it has been confirmed by the Evening Standard.
Up to 22,000 jobs are at risk as Debenhams announced it was going in to administration, the company blamed ‘unprecendeted circumstances as the country remains in lockdown
In a statement on Monday the company said: ‘Department store group Debenhams today has filed a Notice of Intent to appoint an administrator in the UK.
‘This move will protect Debenhams from the threat of legal action that could have the effect of pushing the business into liquidation while its 142 UK stores remain closed in line with the government’s current advice regarding the COVID-19 pandemic.
‘The group is making preparations to resume trading its stores once government restrictions are lifted.’
The retailer, whose accountancy firm KPMG is believed to be handling the process, said it has the support of its lenders to enter administration and is engaging with employees and suppliers over the move.
The company, which has been on British high streets for 242 years, put many of its 22,000 workforce on furlough earlier this month after the government’s lockdown measures calling for the shutdown of non-essential stores were introduced
The majority of its employees in the UK are currently being paid under the Government’s furlough scheme.
The company, added that it continues to trade online across the UK, Ireland and Denmark and customer orders, gift cards and returns are being accepted and processed normally.
Debenhams went into administration in April last year, wiping out equity investors, including Mike Ashley’s Sports Direct, and is now owned by lenders consortium Celine UK NewCo 1 Ltd.
On Monday it appointed Geoff Rowley and Alastair Massey of FRP Advisory to advise the business about the possible administration.
Debenhams CEO Stefaan Vansteenkiste said: ‘With (owners and lenders) support and working with other key stakeholders, including landlords, pension trustees and business partners, we are striving to protect jobs and reopen as many Debenhams stores for trading as we can, as soon as this is possible.’
The department store, which began as a draper business at 44 Wigmore Street in London 1778, was initially founded by William Clark before William Debenham became a partner in the business in 1813.
In 1818, the company opened the doors to its first store outside London in Cheltenham and by 1950 it was the largest department store in the UK.
The company has closed 22 shops in recent months as part of plans to shut 50 sites and bring its total estate to 110.
However the latest announcement comes just a day after the clothing giant Arcadia, which owns brands including Topshop, Miss Selfride, Burton and Dorothy Perkins, confirmed it would be closing its 550 stores amid the coronavirus lockdown.
Arcadia, which has already furloughed 14,500 out of its 16,500 members of staff, has called in accountants from Deloitte as it is ‘on its knees’, according to the Sunday Times.
In March, the high-street fashion retailer Next announced that it would be temporarily shutting down all of its 700 UK stores until further notice.
A spokesperson said on Twitter: ‘We have made the decision to close our stores from today, Monday 23rd March at 6pm, until further notice.
‘We’d like to take the opportunity to thank all of our staff who continue to be incredibly supportive of Next and we would also like to let customers know that we do appreciate their loyal support.’
In the same month the high street giant John Lewis announced they had made the ‘difficult decision’ to close its 50 stores across the UK for the first time in its 155-year history.
The store, which last saw its flagship store on Oxford Street close after it was bombed in 1940 during the Second World War, confirmed the decision had come about due to the impact of the coronavirus outbreak.
Meanwhile the British store Cath Kidston also confirmed that they too would be closing their stores temporarily.
In a statement to its shoppers last month it said: ‘Cath Kidston is committed to the safety of our customers and employees and so we have taken the difficult decision to temporarily close all Cath Kidston Stores, in the UK & Ireland in response to the COVID-19 pandemic. Stores will close tonight, Saturday 21 March, until further notice.
‘We are working to ensure our staff receive financial support and the assistance they need throughout this period of closure.
‘We hope that the situation improves quickly for everyone. In the meantime, we’re here for you in these difficult times and send our love to all those affected. Stay safe, keep well and thank you for your unwavering support for our brand’.
The music store HMV has also had to temporarily close its stores as a result of COVID-19.
Elsewhere, the retailer Timpson, which specialises in shoe repairs, key cutting and locksmith services, also confirmed that they would be ‘going into hibernation’ from March 23.
A statement from the company’s CEO James Timpson read: ‘Our online store and locksmiths business remain open. However, due to the coronavirus outbreak, our shops are sadly going into hibernation.