Our retailing crisis correspondent, MT WALLETTE, on worrying times for employees in one of the town centre’s last remaining department stores
Staff working in Debenhams in Croydon’s Centrale shopping centre were given a reprieve this morning when their store was not listed among the 22 which will close after Christmas.
Reports today suggest that around 1,200 jobs nationally will go when those Debenhams stores close in 2020, but even more workers may be handed their P45s at a later date, as the struggling department store business intends to shut a total of 50 of its worst-performing stores. The additional 28 locations have yet to be identified. The full closure plan equates to 1 in 3 of Debenhams stores.
Debenhams was put through a pre-pack administration earlier this month that wiped out shareholders. Its new owners, a consortium of banks and hedge funds, have begun a company voluntary arrangement (CVA).
A growing number of retailers, struggling as sales shift online, are using CVAs to reduce rent bills. The plan must be signed off by landlords and creditors.
Hammerson are the owners of the Centrale mall where Debenhams has its Croydon store. They are understood to have been already affected by rent reductions when House of Fraser went into administration.
By agreeing to the terms of a CVA, landlords manage to keep stores from closing, but it does little for their own business’s profitabilty, as Hammerson’s recent annual accounts revealed.
It has been reported that the CVA is asking Debenhams’ landlords to agree to “substantial rent cuts”, in the case of some stores, even halving the rent paid to landlords.
Hammerson are half of the “Croydon Partnership”, who with Westfield are supposed to be conducting a £1.4billion redevelopment of Croydon town centre. The shopping centre operators have their scheme under “review”, due to the changing retail sector and Brexit uncertainties, amid growing doubts that they intend to go ahead with the long-delayed Croydon project at all.
Reports today state that chain stores are disappearing from Britain’s high streets at the fastest rate in at least nine years, though they give the reason as a reduction in consumer spending, as much as the shift to online shopping.
“Our priority is to save as many stores and as many jobs as we can, while making the business fit for the future,” Terry Duddy, the executive chairman of Debenhams, said today in announcing the 22 stores to close following the 2019 Christmas period.
On Duddy’s list are Debenhams stores on Orpington, Wandsworth and Wimbledon.
City analysts, meanwhile, are suggesting that the store closures announced do not go far enough. “Debenhams was always an accident waiting to happen, given the large volume of under-invested stores in many locations that are now too small to sustain a department store as shopper habits have changed,” said Jonathan De Mello, the head of retail consultancy at Harper Dennis Hobbs, who is clearly a chap who likes a bargain.
“It’s my view that around 100 stores should be closed,” de Mello said, adding, “Arguably, the likes of Primark provide more of a draw to a town centre than Debenhams.”
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Makes you wonder why on earth anyone would want to open a new store or more to the point, build a load of them.