The future of Debenhams may well already have been decided as reports surface today that those bidding to take on the struggling department store chain were asked to submit their bids by 5pm yesterday (September 1st).
Investment bank Lazard is overseeing the department store’s sale process after Debenhams filed for administration in April.
There are not any ‘saviours’ of the UK high street left…
Mike Ashley’s Frasers Group, Next and a Chinese consortium are reported to be among the parties interested in buying some or all of Debenhams’ stores.
Retail experts have previously warned that Debenhams will struggle to find a buyer prepared to take on the retailer’s large store estate in the current retail environment.
Last month Debenhams appointed investment and turnaround specialist Hilco Capital to draw up contingency plans, including a possible ‘last resort’ liquidation, if attempts to sell the department store chain fail.
Retail experts talking to trade publications including Drapers have said Debenhams will struggle to find a buyer in the current retail climate: “The department store model was already in retreat pre-Covid-19,” says retail analyst Mark Pilkington. “Who would buy Debenhams under these circumstances?”
Sports Direct and House of Fraser owner Mike Ashley had expressed interest in 30 stores but has now bid £30m for DW Sports. Experts doubt he can he afford both DW and Debenhams?
Next has also been mentioned as a potential buyer: “I think there is a more than a 50 per cent chance of [Debenhams going into] liquidation,” says Mr Pilkington.
Retail consultant Graham Malin agrees: “Covid-19 has accelerated the demise of Debenhams, but it is not the main cause. Unfortunately, I cannot see anyone buying the business as it is and locking into its current lease deals. House of Fraser will want some of the sites, but the majority are not new, maybe too large and will require investment or change of use to release potential in today’s market.”
One Debenhams concessionaire agreed a sale was unlikely: “There must be a strong possibility of liquidation if the administrators are willing to accept the costs of preparing for it. There are not any ‘saviours’ of the UK high street left with deep enough pockets or the appetite for risk in an environment of great uncertainty.
“There is potential, however, for some stores to be taken up by Next and Frasers Group, and for the brand to continue as online only – although that direction wasn’t sustainable for BHS.”
Several sources close to Debenhams suggested it will likely switch its focus to its website and sell off remaining stores.
A Debenhams concessionaire said this week: “Debenhams has a fantastic website reach and following, and it can use that to develop all sorts of new consumer routes, such as click and collect, as it has the space available. But it has to survive and get through this.”