LONDON — Another high-street giant has toppled in what is proving to be a dramatic week for British retail, with tens of thousands of jobs now at risk, and the prospect of empty storefronts in city centers across the U.K.
On Tuesday, Debenhams confirmed that its administrators, FRP Advisory, will begin winding down the business after having failed to find a buyer. Debenhams had filed for administration in April, although FRP had kept the stores open as it tried to save the business.
Until now, FRP had been negotiating with JD Sports, which pulled out of talks early Tuesday following Arcadia’s bankruptcy filing late Monday.
As reported, Arcadia confirmed that Matt Smith and Dan Butters, together with other restructuring partners at Deloitte, have been named as joint administrators to the group companies as part of a “trading administration.” While Arcadia’s stores will reopen, Deloitte is now racing to find buyers for the business, with 13,000 jobs at risk.
The fate of Debenhams and Arcadia had long been linked as Arcadia was the largest concession holder at Debenhams, stocking the retailer’s shop floors with women’s clothing brands such as Wallis, Burton and Dorothy Perkins.
The collapse of Debenhams puts 12,000 jobs at risk, with 124 stores nationwide set to go dark. Earlier this year, the company liquidated operations and shut its 11 stores in the Republic of Ireland.
In the spring, Debenhams’ administrators began looking at a number of options including a full or partial sale of the U.K. business; a further restructure of Debenhams’ operations to go forward on a stand-alone basis, or the orderly wind-down of the Debenhams business.
The company, which is owned by a consortium of creditors, said Tuesday that its options were running out.
“The sale process has not resulted in a deliverable proposal, and given the current trading environment and the likely prolonged effects of the COVID-19 pandemic, the outlook for a restructured operation is highly uncertain. The administrators have therefore regretfully concluded that they should commence a wind-down of Debenhams U.K., while continuing to seek offers for all or parts of the business.”
Debenhams, which is best known for is vast beauty halls and programs that saw designers including Roksanda Ilincic, Preen by Thornton Bregazzi and Jasper Conran create dedicated collections, said it will continue to trade through its 124 U.K. stores and online in order to clear its current and contracted stocks.
“On conclusion of this process, if no alternative offers have been received, the U.K. operations will close,” the store said.
The closures will not impact Magasin du Nord in Denmark, which continues to operate independently, Debenhams said.
Geoff Rowley of FRP Advisory, joint administrator to Debenhams and partner at FRP, said “all reasonable steps were taken to complete a transaction that would secure the future of Debenhams. The economic landscape is extremely challenging and, coupled with the uncertainty facing the U.K. retail industry, a viable deal could not be reached.”
He added that “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.
“We are very grateful for the efforts of the management team and staff who have worked so hard throughout the most difficult of circumstances to keep the business trading. We would also like to thank the landlords, suppliers and partners who have continued to work with Debenhams through this turbulent period and can reassure them that all contractual obligations entered into in the administration period will be met in full.”
In early April, the already struggling Debenhams found itself caught in a perfect storm of weak trading, debt restructuring and the crippling impact of lockdown closures. It filed for administration in order to save the store estate while it looked for a buyer.
During lockdown earlier this year, FRP Advisory adopted what’s known as a “light touch” administration, working with the existing Debenhams management team to reopen the business and trade through as many stores as possible.
In April, Stefaan Vansteenkiste, chief executive officer of Debenhams, said, “The appointment of the administrators will protect our business, our employees and other important stakeholders, so that we are in a position to resume trading from our stores when government restrictions are lifted.”