Pedestrians walk past the Debenhams flagship store on Oxford Street (Photo by Hollie Adams/Getty … [+]
Department store chain Debenhams has just filed a notice of intent to appoint administrators, suggesting coronavirus may have pushed it to the brink of collapse.
The chain was forced to close 142 stores due to social distancing regulations, while continuing to pay its staff, suppliers and sizeable rent bills.
With hundreds of millions of pounds in extraneous stock expected to be held, and its suppliers demanding payment, the cash flow constraints have clearly taken a toll.
Today, Debenhams said: “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.”
With roughly 22,000 staff members already furloughed (meaning 80% of their wages are covered for at least three months by the government), long-term job security hangs in the balance.
While Debenhams has continued to trade online throughout the pandemic, its physical stores have been under strain for a while.
It has been almost exactly a year since the chain’s holding company entered insolvency proceedings, following a public battle with infamous Sports Direct tycoon Mike Ashley, whose Frasers Group has become its biggest shareholder.
28 stores had already been earmarked for closure, following the post-Brexit sales slump which savaged the high street.
Debenhams boss Stefaan Vansteenkiste said the circumstances of the decision were “unprecedented.”
Currently, all customer orders, gift cards and returns are being accepted and processed normally.