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UK retailer Debenhams to be liquidated; Philip Green's Arcadia files for insolvency
BRITISH department store retailer Debenhams is to start a liquidation process that will see its stores close and the potential loss of 12,000 jobs, dealing another hammer blow to the country's retail sector during the Covid-19 pandemic.
Debenhams administrators FRP Advisory said on Tuesday the decision to wind down Debenhams followed its failure to find a buyer. JD Sports Fashion confirmed on Tuesday it would not make an offer for the group. The collapse of Debenhams, which trades from 124 UK stores, comes a day after Philip Green's Arcadia fashion group entered administration, threatening about 13,000 jobs.
"Given the current trading environment and the likely prolonged effects of the Covid-19 pandemic, the outlook for a restructured operation is highly uncertain," FRP said. "The administrators have therefore regretfully concluded that they should commence a wind-down of Debenhams UK, whilst continuing to seek offers for all or parts of the business," FRP said
Debenhams will continue to trade through its UK stores and online to clear its current and contracted stocks. "On conclusion of this process, if no alternative offers have been received, the UK operations will close."
Meanwhile, Bloomberg reported that Philip Green's Arcadia Group has filed for insolvency. The company confirmed in a statement that it had appointed Deloitte as administrator in the proceedings, a move that will allow the owner of brands including Topshop and Dorothy Perkins to seek protection from creditors.
Arcadia intends to keep its stores open and existing management will stay in place under the supervision of Deloitte.
CEO Ian Grabiner said in the statement: "The impact of the Covid-19 pandemic, including the forced closure of our stores for prolonged periods, has severely impacted on trading across all of our brands." It will be the UK's most notable retail insolvency since the onset of the pandemic and a blow to the industry, which has already lost more than 125,000 roles since January. Arcadia's sales have been hit by forced closures in 2020, part of the government's plan to halt the spread of Covid-19.
It was already struggling last year when it carried out a company voluntary arrangement, another form of UK insolvency, to close stores and cut rents in a bid to lower costs. Profit had fallen from £416 million (S$745 million) in 2013 to a £169 million loss in 2018, when it last filed accounts.
Bidders are already circling Arcadia, which has declined an offer from Frasers Group for a rescue loan of as much as £50 million, said a statement from the company. Frasers has also said it would be interested in buying the business if it fell into administration. REUTERS, BLOOMBERG