Mike Ashley’s Fraser Group in talks to rescue Debenhams
SPORTS Direct boss Mike Ashley has confirmed his Frasers Group business is in talks to buy and rescue collapsed retailer, Debenhams. The 242-year-old department store chain is on the verge of being liquidated after rescue talks to save the business failed, putting its 124 shops and 12,000 jobs at risk. Frasers said it hopes a […]
SPORTS Direct boss Mike Ashley has confirmed his Frasers Group business is in talks to buy and rescue collapsed retailer, Debenhams.
The 242-year-old department store chain is on the verge of being liquidated after rescue talks to save the business failed, putting its 124 shops and 12,000 jobs at risk.
Frasers said it hopes a possible rescue deal can save as many jobs at possible.
However, Mr Ashley has warned that unless a deal can be reached quickly, it may not be able to save Debenhams.
Unless a deal is struck, the household retailer could disappear from the high street altogether after JD Sports last week pulled out of a potential agreement to buy the business out of administration.
JD Sports was the last remaining bidder for Debenhams.
The collapse comes after Debenhams’ sales in the six months to October plunged to £323million versus billions in its heyday.
It has already cut 6,500 jobs since May, while Debenhams last week launched a 70% off “fire sale” in stores and online as it tries to shift stock.
It is understood that the collapse of rescue talks were partly linked to the administration of Arcadia Group.
Arcadia, owned by Sir Philip Green, is the biggest operator of concessions in Debenhams stores and went into administration on November 30, 2020.
Sir Philip Green’s retail empire includes brands such as Burton, Dorothy Perkins, Miss Selfridge and Topshop. The collapse of Arcadia puts 13,000 jobs at risk.
High street job cuts
THE following chains have announced job cuts and store closures during the coronavirus crisis:
- Burger King: the fast food giant is restructuring – which could cost up to 1,600 jobs
- Pizza Hut: confirmed job losses up up to 450 jobs after a plan to close 29 restaurants was approved by landlords
- H&M:-announced plans to shut 250 stores globally next year.
- TSB – 164 branches are at risk of closure – with 848 employees at risk
- Fuller’s: Fuller’s said more than 500 jobs could be lost as a result of the pandemic.
- Pizza Express: Confirmed 73 restaurants to close putting 1,100 jobs at risk
- Premier Inn: Owner Whitbread to cut 6,000 jobs due to coronavirus
- Wetherspoons: To cut up to 450 jobs from six pubs in airports
- Costa Coffee: announced plans to cut 1,650 jobs
- Cineworld: 5,500 jobs thought to be at risk as all UK and Ireland cinemas are set to shut temporarily
- Pret A Manger: 2,800 jobs at risk as 30 stores are earmarked for closure
- Marks and Spencer: confirmed plans to axe up to 7,000 workers over the next three months
- WHSmith: says 200 jobs are at risk as it looks to close 25 stores
- Argos: 3,500 jobs are to go at Sainbury’s and Argos, with the majority at the toy retailer
- John Lewis: 1,5000 head office jobs are to go following 1,300 gone in stores
Frasers Group said: “Whilst Frasers Group hopes that a rescue package can be put in place and jobs saved, time is short and the position is further complicated by the recent administration of the Arcadia Group.
“There is no certainty that any transaction will take place, particularly if discussions cannot be concluded swiftly.”
Frasers finance boss Chris Wootton first hinted that the company might be interested in a deal for Debenhams in an interview with the Sunday Times.
He told the paper: “We hope to be able to save as many jobs as possible.
“However, we have found that Debenhams has been overly reliant on Arcadia for many years, and, with the administration of Arcadia last week, as well as no end in sight to the outdated business rates regime which unduly punishes the likes of Debenhams, it may be a bridge too far.”
It’s not the first time Frasers Group has shown interest in Debenhams. The retailer last year rejected a £200million bid from Mr Ashley after it fell into administration for the first time.
What does it mean when a company goes into administration?
ADMINISTRATION is when all control of a company is passed to an appointed to a licensed insolvency practitioner.
It doesn’t necessarily mean the end of the business.
Instead, administrators will try to help a company find ways to repay debts or solve its cashflow problems.
Administration can last anywhere from a few weeks to up to a year or more.
But if the administration process can’t rescue the company or find a new owner, this usually leads to liquidation.
Liquidation is the process of selling all assets and then dissolving the company completely.
Debenhams‘ website and shops remain open, but it’s understood its shops could close as soon as next year.
Dates for store closures will depend on when stock sells out and if parts of the business are sold off.
Debenhams continues to accept gift cards, however, shoppers are being urged to spend theirs sooner rather than later.
Debenhams isn’t the only retailer to confirm its struggles over the past few months, with coronavirus restrictions intensifying the mounting pressures facing the UK high street.
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