Debenhams set for 50 store closures in CVA plan
Written by Hannah McGrath
Debenhams’ new owners have outlined plans to close around 50 stores as part of plans to restructure the business after it collapsed into administration earlier this month.
The proposed closure plans, which put thousands of jobs at risk, are based on proposals for a Company Voluntary Arrangement (CVA) set out in October last year, which have been adopted by Debenhams’ new owners.
The plans will be dependent upon the company’s creditors backing propsals for a CVA.
Debenhams stressed that under the plans, all 166 current stores will remain open during 2019, including during the Christmas trading period, with 22 stores set to close in 2020, followed by further closures in the coming years.
Around 1,200 Debenhams staff working in the 22 stores earmarked for the first wave of closure have been informed of the plans this morning, with Debenhams saying it would “try to deploy as many as possible”.
The company said it expected total closures over the next five years to be “around 50”, although the final number would be “dependent on future trading performance”.
The initial stores set for closure in 2020 include those in: 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 and Wolverhampton.
Terry Duddy, executive chairman of Debenhams, said: “The issues facing the UK high street are very well known, Debenhams has a clear strategy and a bright future, but 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.
“Our priority is to save as many stores and as many jobs as we can, while making the business fit for the future.”
The CVA plans, which cover both the retail business and property business, will enable Debenhams to forge ahead with rent and lease renegotiations with landlords and local authorities over business rates.
If approved by creditors, the CVA will form part of a £200 million pre-pack administration and refinancing deal agreed earlier this month, which saw the business pass into the hands of lenders and shareholder value wiped out.
In a statement released this morning, Debenhams said the CVAs - if approved - would "serve to keep Debenhams on a stable financial footing and ensure the future of the company".
In order to pass, the CVA proposals will need 75 per cent support from the company’s creditors at a meeting on 9 May.