Our retailing correspondent, MT WALLETTE, on the latest set-back to a £1.4billion redevelopment of the town centre based on retailing
Hammerson, one half of The Croydon Partnership which wants to rebuild a vast town centre shopping mall, could face the second of its major department stores knocking on their door with a begging bowl and asking to end or reduce their rent payments, or even close their Croydon store.
Debenhams yesterday rushed out an early statement to the London Stock Exchange to reassure investors as its share price dropped by 10 per cent. The lack of confidence in the business was based on suggestions that Debenhams would soon be seeking a CVA – a company voluntary arrangement – which would include widescale store closures and agreements with landlords to reduce its rents.
This is all going on even as Croydon Council is distributing Compulsory Purchase Order notices to property owners dotted around the Whitgift Centre, to facilitate the £1.4billion redevelopment plans put forward by Hammerson and their partners, Unibail-Rodamco-Westfield.
The rumours circulating in The City about Debenhams (and that’s all they are, just rumours, according to the company’s executives) come just weeks after the House of Fraser applied for a CVA and ultimately was bought by Mike Ashley’s Sport Direct group. The House of Fraser is the other large department store that leases space in Croydon’s Centrale shopping mall from Hammerson.
Today, Debenhams bosses were saying that they expect to make £33million of annual profits. The department store chain’s chief executive, Sergio Bucher, told the stock market: “The market environment remains challenging and underlying trends deteriorated through the summer months.”
Which is hardly cheery news for a council – Croydon – and major landowner – the Whitgift Foundation – which have spent the past six years trying to convince anyone that might listen that a huge retailing centre is just what the town centre needs.
The Sunday newspaper stories regarding Debenhams considering a CVA are well-based: the company has hired consultants KPMG to examine ways it could restructure to cope with a downturn in trading. And Debenhams issued its third profit warning of the year in June.
At least 80 head office jobs are also expected to be lost as the chain attempts to cut costs at its fashion and home divisions.
And there’s more dark news rolling down the high street for Croydon’s Hammersfield development, with the John Lewis Partnership expected to announce on Thursday that it did not make a penny of profit in the first six months of this year. This compares to a £26.6million profit last year.
The agreement by John Lewis to open a department store, together with a Waitrose supermarket, in the Croydon town centre development has been held up by the Hammersfield partners and senior council figures, such as council leader Tony Newman and chief exec Jo “We’re Not Stupid” Negrini, as the solution to the long-delayed regeneration project.
Ever since it was announced in 2012, those lobbying for the vast Hammersfield supermall in Croydon town centre have tried to ignore the observable trends in the retail trade, and the impact of a decade of austerity and the uncertainties of Brexit. They have also claimed that the Hammersfield shopping mall will created 5,000, and more recently 7,000 new jobs.
So the news from John Lewis in the past week will provide a further concern, since that business made 1,838 people redundant in the year to the end of June, nearly three times the level in the previous year, as it cut costs amid its profits slump.
The company said it had created new jobs, including hiring 600 staff when it opened its new Westfield store in White City. It also increased its in-house design and buying teams for own-label goods, meaning that in total there are now 700 fewer employees across the group than a year ago – taking the total to just over 83,000 staff.
It is speculated that in Croydon, John Lewis’s presence in the Hammersfield mall will have barely any impact on local job creation. The John Lewis at Home store on Purley Way is expected to close, while its Waitrose store on George Street might be transferred up the road to the new premises.
That, though, is some way off: the Hammersfield supermall is not expected to open until 2023 – six years later than first promised.
By which time, there might be even fewer stores operating on what was once known as the “high street”.
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