Debenhams stores in the north saved from first round of closures
THE five Debenhams outlets in the north have been spared from the first round of store closures announced by the department store chain yesterday.
The retailer is set to close 22 stores early next year, putting 1,200 jobs at risk. The move comes after, as expected, the group announced a Company Voluntary Arrangement (CVA) - a controversial insolvency procedure used by struggling firms to shut under-performing shops.
Further closures could still be announced following discussions with landlords, but for now it is a welcome boost for high street retail in Northern Ireland.
It has also been confirmed that rent reductions will be sought on many of the remaining branches, which could include those in the north.
Debenhams employs around 26,000 staff in the UK, roughly 250 of which are in the north.
The chain's biggest Northern Ireland store is at CastleCourt in Belfast, while it has other shops in Newry, Craigavon, Derry and Ballymena.
Terry Duddy, executive chairman of Debenhams, said a restructuring of the business is essential to ensure its long-term survival
"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," he said.
"Our priority is to save as many stores and as many jobs as we can, while making the business fit for the future."
The department store chain announced that it would pursue a restructuring last October, but the path for the process has now been cleared after control of the company was passed to its lenders.
Debenhams went into a pre-pack administration earlier this month, wiping out the stakes of all shareholders including Sports Direct's Mike Ashley.
Creditors including landlords will have the opportunity to vote on the CVA in a process overseen by advisers at KPMG.
Jim Tucker, a senior restructuring partner at KPMG, said yesterday's announcement marks the "next phase" of Debenhams' financial and operational restructuring strategy, following the comprehensive funding package announced at the end of March.
"If approved, and with the support of lenders and landlords, the CVAs will allow the business the flexibility to implement its turnaround strategy with a store estate that reflects the current UK retail environment."
Northern Ireland Retail Consortium director, Aodhán Connolly believes the challenges facing department stores are a microcosm of the immense changes affecting the retail industry.
"Rising costs, a sluggish economy, and changing shopping habits are making life incredibly hard for the industry," he said.
"Those pressures are being exacerbated by ever-increasing public policy costs which are making it more expensive to employ workers and operate from physical premises. These factors will lead to a very different retail industry over the next few years."
Debenhams also released a financial update for the 26 weeks to March 2, showing that sales at its UK stores declined by 7.4 per cent during the period due to weaker footfall.
Underlying earnings declined by 36.6 per cent to £65.9m.
The stores expected to close in 2020 are: 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, Wolverhampton.