County department stores to remain open as Debenhams battles for survival
Debenhams staff and customers in Blackpool and Preston can breathe a sigh of relief after the beleaguered retailer said it would not be closing those two stores for now.
But the group is to close as a many as 22 stores, including the one in Lord Street, Southport, putting 1,200 jobs at risk across the department store chain.
The saving of the anchor stores at Preston in the Fishergate Centre and at the Houndshill Centre in Blackpool is a reprieve for the hard-pressed high streets.
Debenhams has announced a Company Voluntary Arrangement (CVA), a finance arrangement, to allow it to keep the affected shops open until early 2020.
Further closures could still be announced following discussions with landlords. Meanwhile rent reductions will be sought on many of the remaining branches.
Terry Duddy, executive chairman of Debenhams, said: "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.
"Our priority is to save as many stores and as many jobs as we can, while making the business fit for the future."
The retailer announced that it would pursue a restructuring last year, 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: "Today'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."
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.
Gary Carter, GMB national officer, said: "Although many will not be surprised by the closure announcements, this is devastating news for Debenhams employees who have battled hard to keep the company afloat.
"They will join the tens of thousands of retail workers made redundant in recent months.
He added: "It's about time this Government stopped bickering over Brexit and did something to stem retail job losses and reinvigorate Britain's high streets."