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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 |
| (30 minutes later) | |
| Rolling coverage of the latest economic and financial news, with 25,000 jobs now at risk across two UK retailers | Rolling coverage of the latest economic and financial news, with 25,000 jobs now at risk across two UK retailers |
| The collapse of Debenhams will leave vacant spaces on the high street that will “impossible to fill” in a like-for-like way, warns Dr Gordon Fletcher of University of Salford Business School. | |
| UK factories are holding up better than the retailers.....thanks to Brexit stockpiling. | |
| New figures this morning showed that output growth, and new business orders, both accelerated last month, helping to slow (but not stop) the downturn in employment. | |
| Data firm Markit, which compiles the monthly PMI report, explains: | |
| But the consumer goods sector had a poorer November, with back-to-back decreases in both production and new business. | |
| Duncan Brock of the Chartered Institute of Procurement & Supply says manufacturers were running at full pelt to meet Brexit stockpiling demands, but 2021 could bring disruption: | |
| Consumer journalist Harry Wallop makes a good point - people haven’t stopped shopping, but they’re shopping less on the high street. | Consumer journalist Harry Wallop makes a good point - people haven’t stopped shopping, but they’re shopping less on the high street. |
| The latest ONS figures show that UK retail sales have risen for six months in row (up to October). But since February, before the first lockdown, online sales had increased by 52% while bricks and mortar shops had suffered a 3.3% fall. | The latest ONS figures show that UK retail sales have risen for six months in row (up to October). But since February, before the first lockdown, online sales had increased by 52% while bricks and mortar shops had suffered a 3.3% fall. |
| Chloe Collins, senior retail analyst at GlobalData Retail, shows how Debenhams fortunes have waned in recent years: | Chloe Collins, senior retail analyst at GlobalData Retail, shows how Debenhams fortunes have waned in recent years: |
| Pippa Stephens, retail analyst at GlobalData, fears there’s little chance that Debenhams’ administrators will receive a late offer to prevent the business closing down. | Pippa Stephens, retail analyst at GlobalData, fears there’s little chance that Debenhams’ administrators will receive a late offer to prevent the business closing down. |
| She says: | She says: |
| This will create even more empty units in UK shopping centres, and boarded up shops on the high street, with a knock-on impact on landlords. | This will create even more empty units in UK shopping centres, and boarded up shops on the high street, with a knock-on impact on landlords. |
| Rival retailers could cherry pick some sites, though, she adds: | Rival retailers could cherry pick some sites, though, she adds: |
| More Debenhams history here: | More Debenhams history here: |
| If Debenhams can’t be saved, then it will be a sad end to a retail story dating back 242 years. | If Debenhams can’t be saved, then it will be a sad end to a retail story dating back 242 years. |
| The company traces its history back to 1778, and a drapers store opened at 44 Wigmore Street by one William Clark. | The company traces its history back to 1778, and a drapers store opened at 44 Wigmore Street by one William Clark. |
| Clark sold “expensive fabrics, bonnets, gloves and parasols” to West End shoppers. Thirty five years later, William Debenham invested in the firm which then became Clark & Debenham | Clark sold “expensive fabrics, bonnets, gloves and parasols” to West End shoppers. Thirty five years later, William Debenham invested in the firm which then became Clark & Debenham |
| Debenhams’ potted history explains that the firm did well from Victorian mourning dress: | Debenhams’ potted history explains that the firm did well from Victorian mourning dress: |
| A flurry of acquisitions followed. The Debenham family stayed involved until the 1920s, when it became a listed company -- by 1950 it was the UK’s largest department store group. | A flurry of acquisitions followed. The Debenham family stayed involved until the 1920s, when it became a listed company -- by 1950 it was the UK’s largest department store group. |
| Seventy years later, it faces being liquidated and broken up in the new year, a very sad end for its 12,000 staff, and a blow to its suppliers and the wider economy too. | Seventy years later, it faces being liquidated and broken up in the new year, a very sad end for its 12,000 staff, and a blow to its suppliers and the wider economy too. |
| The UK retail crisis is particularly painful for female workers, as they make up roughly three in five jobs in the sector. | The UK retail crisis is particularly painful for female workers, as they make up roughly three in five jobs in the sector. |
| Even before the pandemic, there were signs that the wave of store closures and job losses was having a disproportionate impact on women. The Royal Society of the Arts reported last year that 70% of the retail jobs lost to automation and ecommerce were among female employees. | Even before the pandemic, there were signs that the wave of store closures and job losses was having a disproportionate impact on women. The Royal Society of the Arts reported last year that 70% of the retail jobs lost to automation and ecommerce were among female employees. |
| The collapse of Arcadia and now Debenhams will exacerbate this problem, warns Joe Levenson, director of communications and campaigns at Young Women’s Trust: | The collapse of Arcadia and now Debenhams will exacerbate this problem, warns Joe Levenson, director of communications and campaigns at Young Women’s Trust: |
| If the Government is serious about protecting the most vulnerable, the needs of young women must be at the heart, Levenson adds: | If the Government is serious about protecting the most vulnerable, the needs of young women must be at the heart, Levenson adds: |
| TUC General Secretary Frances O’Grady says the crisis on UK high streets underlines the need for ‘urgent, targeted’ action to support sectors such as retail: | TUC General Secretary Frances O’Grady says the crisis on UK high streets underlines the need for ‘urgent, targeted’ action to support sectors such as retail: |
| O’Grady also urges the government to provide more financial aid to struggling families through universal credit. | O’Grady also urges the government to provide more financial aid to struggling families through universal credit. |
| Currently, the temporary £20-per-week increase in UC is due to end in April 2021, which would mean a £1,000 annual cut in benefits - unless the government acts first. There was no decision in last week’s Spending Review. | Currently, the temporary £20-per-week increase in UC is due to end in April 2021, which would mean a £1,000 annual cut in benefits - unless the government acts first. There was no decision in last week’s Spending Review. |
| The Resolution Foundation says failing to extend the increase would hurt 6 million households next year, just when unemployment is expected to be peaking. | The Resolution Foundation says failing to extend the increase would hurt 6 million households next year, just when unemployment is expected to be peaking. |
| Retail analyst Patrick O’Brien of GlobalData has a great example of how Debenhams’ former private equity owners trapped the firm in expensive property deals. | Retail analyst Patrick O’Brien of GlobalData has a great example of how Debenhams’ former private equity owners trapped the firm in expensive property deals. |
| Back in 2005, Debenhams agreed a £495m sale-and-leaseback deal with property firm British Land (details here). | Back in 2005, Debenhams agreed a £495m sale-and-leaseback deal with property firm British Land (details here). |
| Debenhams sold 23 freeholds and long leaseholds on stores across the UK, binding itself into 30-year leases (or 35 years for London’s Oxford Street and Manchester high street stores). | Debenhams sold 23 freeholds and long leaseholds on stores across the UK, binding itself into 30-year leases (or 35 years for London’s Oxford Street and Manchester high street stores). |
| The deal also guaranteed annual rent increases (2.5% compound, or 3% from March 2010 to 2014). | The deal also guaranteed annual rent increases (2.5% compound, or 3% from March 2010 to 2014). |
| O’Brien points out that the warning signs from online shopping were already obvious. | O’Brien points out that the warning signs from online shopping were already obvious. |
| A year later, Debenhams was floated in the stock market again. But some in the City were already wary, and its private equity owners were forced to price its shares at the bottom of the range to get the deal away. | A year later, Debenhams was floated in the stock market again. But some in the City were already wary, and its private equity owners were forced to price its shares at the bottom of the range to get the deal away. |
| As my colleague Julia Finch wrote at the time: | As my colleague Julia Finch wrote at the time: |
| Shadow business minister Ed Miliband tweets: | Shadow business minister Ed Miliband tweets: |