On a dark day for UK retail, 242-year-old Debenhams will close

The future of around 25,000 retail jobs in Britain is at stake after the bankruptcy of two long-established companies exposed the fragility of much of the sector during the coronavirus pandemic.

Debenhams, the 242-year-old department store chain, said Tuesday that managers had decided to begin shutting down operations after a potential buyer of the company withdrew. The move will potentially lead to the loss of 12,000 jobs if no buyer is found, as seems likely.

It was another devastating blow to the industry, coming just hours after the Arcadia Group, the retail empire of billionaire Philip Green, entered administration, a type of bankruptcy protection, on Monday night.

Both companies will reopen their doors in England on Wednesday when they emerge from a nearly month-long lockdown that forced the closure of stores selling items deemed non-essential, including clothing. Since the pandemic took hold in March, the UK has forced retail outlets to close in a number of ways.

For Debenhams, the reopening of its 124 UK stores is not expected to last long even though managers said they will continue to seek offers “for all or part of the business” as they begin selling shares and liquidating the business.

Arcadia’s group of brands, which includes brands like Burton, Miss Selfridge and Topshop, could still have a future and managers are looking for buyers for the whole company or parts of it.

Retail experts said the pandemic and associated restrictions only account for part of the problems companies have encountered. Both have struggled to respond to increased competition from low-cost rivals like Primark, as well as online disruptors like ASOS and Boohoo.

It seems like a sad ending for Debenhams, whose history dates back to 1778, when William Clark opened a shop in London’s West End to sell fabrics, hats, gloves and umbrellas. In 1813 William Debenham invested in the company, which became Clark & ​​Debenham. In 1950 the renowned Debenhams was one of the UK’s largest department store groups.

Retail chain JD Sports had been considering an offer for Debenhams, but withdrew after Arcadia said it would go into administration. Arcadia is the largest concession operator in Debenhams department stores, so its potential collapse affected Debenhams’ appeal.

Debenhams, who took over the administration in April, has already cut 6,500 jobs. It said it will continue to operate both in-store and online to clear its current and contracted stock.

“Upon completion of this process, if no alternative offers have been received, UK operations will be closed,” the company said in a statement.

FRP Advisory’s Geoff Rowley, who is a joint manager at Debenhams, said that “the economic outlook is extremely challenging and coupled with the uncertainty facing the UK retail industry, a viable deal could not be reached.”

About 12 hours earlier, Arcadia called Deloitte administrators. He said that the forced closure of his stores for long periods this year had “seriously affected” the trade.

In addition to suffering from the pandemic, critics have said that the 68-year-old Green, who has been embroiled in a number of controversies in recent years, has not invested enough in businesses to get them in shape to deal with them. newer and more agile online competitors.

“Arcadia has suffered against these emerging players because the company was slow to develop an innovative and easy-to-use online offering, as well as a strong brand narrative and social media presence,” said Nina Marston, fashion and luxury analyst at Euromonitor International.

Unlike Debenhams, there is hope that something can be salvaged from Arcadia and Deloitte’s Matt Smith said he hopes to “identify one or more buyers to ensure future business success.”

Arcadia, like Debenhams, has a long history, dating back to the early 20th century, when Montague Burton, an 18-year-old Lithuanian émigré, came to Britain. The brands were added to Burton’s menswear business before the Arcadia umbrella company was formed in 1997. Green took over the company in 2002 and, in the early years, his management won him admirers, which helped his Brands to bond with people like supermodel Kate. Moss and singer Beyonce.

– Associated Press