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Debenhams to be wound down putting 12,000 jobs at risk – business live | Debenhams to be wound down putting 12,000 jobs at risk – business live |
(32 minutes later) | |
Rolling coverage of the latest economic and financial news, with 25,000 jobs now at risk across two UK retailers | |
Shadow business minister Ed Miliband tweets: | |
Covid-19 may have accelerated the crisis in UK retail, but the problems at Debenhams (like Arcadia) predate the pandemic. | |
Back in April, Debenhams achieved the unwelcome distinction of filing for administration twice in 12 months. | |
The first administration, in 2019, wiped out shareholders (including Mike Ashley’s stake), and led to scores of store closures - cutting Debenhams workforce from 25,000 in March 2019 to just 13,000 today. | |
That 2019 collapse was triggered by Debenhams’ £560m debt mountain, run up by private equity owners before it was floated on the stock market in 2006 [one banker later dubbed Debenhams a ‘bomb waiting to go off’]. | |
Such a debt pile, added to long leases on high street stores, doesn’t give retailers much of a chance of innovating and keeping pace with online rivals. | |
As Richard Lim, chief executive at Retail Economics, puts it today: | |
Arcadia’s collapse last night pushed Debenhams closer to the brink, explains Julie Palmer, partner at Begbies Traynor, the corporate restructuring firm. | Arcadia’s collapse last night pushed Debenhams closer to the brink, explains Julie Palmer, partner at Begbies Traynor, the corporate restructuring firm. |
JD Sports then delivered the final blow by abandoning rescue talks this morning. | JD Sports then delivered the final blow by abandoning rescue talks this morning. |
ITV’s Joel Hills also reckons there were several reasons why JD Sports got cold feet: | ITV’s Joel Hills also reckons there were several reasons why JD Sports got cold feet: |
JD Sports’ decision to walk away from rescue talks with Debenhams this morning was the trigger to start winding the department store chain down, my colleague Sarah Butler writes: | JD Sports’ decision to walk away from rescue talks with Debenhams this morning was the trigger to start winding the department store chain down, my colleague Sarah Butler writes: |
Lucy Powell MP, Labour’s Shadow Minister for Business and Consumers, says the government must protect the thousands of workers at risk at Debenhams and Arcadia. | Lucy Powell MP, Labour’s Shadow Minister for Business and Consumers, says the government must protect the thousands of workers at risk at Debenhams and Arcadia. |
That includes pushing Sir Philip Green to tackle Arcadia’s pension scheme deficit, Powell insists, saying: | That includes pushing Sir Philip Green to tackle Arcadia’s pension scheme deficit, Powell insists, saying: |
Last year, the Green family did agree a pension deficit reduction schedule with regulators, including £100m from Lady Tina Green. | Last year, the Green family did agree a pension deficit reduction schedule with regulators, including £100m from Lady Tina Green. |
But the Arcadia scheme is still in deficit, estimated at £350m. | But the Arcadia scheme is still in deficit, estimated at £350m. |
That could mean members who have not reached the scheme‘s normal retirement age face a 10% cut to their pensions once the scheme is placed in the UK pensions lifeboat. | That could mean members who have not reached the scheme‘s normal retirement age face a 10% cut to their pensions once the scheme is placed in the UK pensions lifeboat. |
A our financial editor Nils Pratley says - the Greens have a moral obligation to Arcadia’s staff, and can hardly “plead poverty from the deck of a large motor yacht”. | A our financial editor Nils Pratley says - the Greens have a moral obligation to Arcadia’s staff, and can hardly “plead poverty from the deck of a large motor yacht”. |
The FT’s Jonathan Eley fears that Debenhams will go the same way as Woolworths, another high street stalwart, which collapsed after the financial crisis. | The FT’s Jonathan Eley fears that Debenhams will go the same way as Woolworths, another high street stalwart, which collapsed after the financial crisis. |
My colleague Zoe Wood points out that 25,000 retail workers are directly caught up in the crisis at Arcadia (Topshop, Evans, Burton, Miss Selfridge...) and Debenhams. | My colleague Zoe Wood points out that 25,000 retail workers are directly caught up in the crisis at Arcadia (Topshop, Evans, Burton, Miss Selfridge...) and Debenhams. |
The decision to start winding up Debenhams comes just 14 hours after Arcadia fell into administration, creating a real shock across the UK retail sector. | The decision to start winding up Debenhams comes just 14 hours after Arcadia fell into administration, creating a real shock across the UK retail sector. |
Here’s George MacDonald of Retail Week: | Here’s George MacDonald of Retail Week: |
It’s simply desperate news for thousands of retail staff across the country, as the BBC’s Sima Kotecha tweets: | It’s simply desperate news for thousands of retail staff across the country, as the BBC’s Sima Kotecha tweets: |
Here’s Reuters’ early take on the winding up of Debenhams: | Here’s Reuters’ early take on the winding up of Debenhams: |
Geoff Rowley of FRP Advisory, a joint administrator to Debenhams, says administrators ‘deeply regret’ the decision to start closing the company. | Geoff Rowley of FRP Advisory, a joint administrator to Debenhams, says administrators ‘deeply regret’ the decision to start closing the company. |
Rowley also hasn’t given up hope that a buyer could be found -- but says a ‘viable deal’ couldn’t be reached in the current economic climate. | Rowley also hasn’t given up hope that a buyer could be found -- but says a ‘viable deal’ couldn’t be reached in the current economic climate. |