Analysts warn that at least 50 Debenhams stores are expected to close across the United Kingdom despite reassurances from the retailer last Tuesday.
Yesterday, Debenhams fell into administration, however, the bulk of the business was immediately sold to a consortium of its lenders, which include hedge funds and banks. A more long-term buyer is now being sought as part of its efforts for lenders to recoup the more than £250 million that has been lent to Debenhams.
Last Tuesday, Debenhams said that the said deal “delivers continuity for all Group operations and was in the best interests of the Group’s creditors, employees, customers, pension holders, and suppliers.”
However, in a note last Tuesday, a respected retail analyst at stockbroker Shore Capital, Clive Black, and Greg Lawless, Black’s colleague warned that “store closures [are] inevitable.”
The pair wrote: “Back in Autumn 2018 the management team announced a restructuring programme which would see up to 50 stores close over a three to five-year period.”
They added: “In our view, under new owners, this restructuring plan may well be accelerated, together with a renegotiation of property leases with landlords.”
Other analysts echoed the view of Black and Lawless.
A senior analyst at stockbroker Hargreaves Lansdown, Laith Khalaf, stated: “We can still expect Debenhams to continue trading, though store closures are inevitable as Debenhams cuts its cloth to fit today’s increasingly digital retail environment.”
The chief market analyst at trading platform XTB, David Cheetham, stated: “It is hard to see a long-term future for employees unless a takeover can be agreed upon with lenders likely to take any legal means to recoup as much of the debt as possible.”
The store closure warnings are expected to reignite concerns around job losses at the department store, despite the reassurance from Debenhams that the deal struck last Tuesday would leave stores and employees unaffected. Debenhams employs approximately 30,000 people and has 166 department stores across the United Kingdom.