Our demise-of-high-street-retailing correspondent, MT WALLETTE, says that there’s no coming back from the latest hammer blow to the £1.4bn town centre regeneration scheme
Coronavirus claimed another victim last night: Debenhams in Croydon.
In truth, the department store, which has been a fixture in the town centre for half a century, had been clinging on for dear life for more than a year – a pre-existing condition, if you will.
But the store’s owners announced that their branch in Centrale is one of another five around the country which won’t be re-opening after the covid-19 lockdown is lifted, with the loss of a total of 1,000 jobs.
The deeper significance of the announcement is that the other Debenhams stores never to re-open alongside Croydon’s are at the Bullring in Birmingham, The Oracle in Reading, Highcross in Leicester and Silverburn in Glasgow. All these shopping centres are owned by Hammerson.
Hammerson, of course, is half of the “Croydon Partnership”, the shot-gun corporate marriage of convenience with Westfield arranged under pressure from Boris Johnson when he was Mayor of London, eagerly encouraged at the time by Gavin Barwell, someone who thought nothing of being a board member of landowners, the Whitgift Foundation, while lobbying in their interests as the MP for the area.
It is fair to say that the £1.4billion “regeneration” of Croydon town centre by Westfield and Hammerson – “Hammersfield” – was already dead before coronavirus arrived on these shores. The Debenhams news will see it buried, even before Jo “We’re Not Stupid” Negrini, the council’s chief executive and “regeneration practitioner”, has got round to revealing her cunning “Plan B” to end almost a decade of blight to Croydon’s high street.
Hammerson, as owners of Centrale and the original choice of the leaseholders to redevelop the Whitgift Centre, were often seen as the more benign part of the Croydon Partnership.
Indeed, their tolerant approach in more recent times to tenants who didn’t fancy paying their rents had enabled the likes of Debenhams to continue to trade on favourable terms as the downturn in high street retailing got ever worse.
But now, times are so tough even Hammerson have drawn a line under how generous they can be with tenants, prompting Debenhams to call it a day in Croydon, Glasgow, Birmingham, Reading and Leicester.
Staff in Croydon have been furloughed by Debenhams since the store was forced to close its doors under the coronavirus lockdown at the end of March. They will now need to seek government help as unemployed.
One Debenhams worker who contacted Inside Croydon (asking not to be identified), said, “We’ve seen this coming for a long while now. I was surprised we survived when we went into administration the first time. It was not a matter of ‘if’, but ‘when’, and the coronavirus closure probably just put our store out of its misery.
“Footfall had been poor through the centre for a while. I’d like to think that I could get another job at another store – but where? Allders? The council even managed to kill off the trade in that building, and all for the Westfield scheme that was never going to happen.”
At least 150 people worked at Debenhams in Centrale, either as staff of the retailer or for independently owned concessions.
Debenhams had gone into administration for the second time in a year last month. Last night’s announcement means that a total of 16 of its stores will remain shuttered when lockdown restrictions are eased.
Debenhams was struggling with a £600million debt pile before the crisis led to the temporary closure of all its stores. Last month Debenhams said the so-called “light-touch” administration aimed to “get the business into a position to reopen and trade as many stores as possible again when restrictions are lifted”.
Those negotiations involved longer lines of credit on stock and supplies, plus five-month rent holidays from their landlords. The government has been paying 80 per cent of the company’s staff wage bill under the furlough scheme for the past month.
It was in April 2019 that the company went into administration for a first time, wiping out all its existing shareholdings and transferring ownership to a group of financial investors including American hedge funds Silver Point and GoldenTree. Under a CVA – company voluntary arrangement – it had got rent rebates, but still closed 19 of its stores in January.
Then, Hammerson was able to indulge Debenhams. That one of the country’s largest shopping centre landlords is unwilling, or unable, to do so any further is a significant signal about the state of their own business.
In April Hammerson said that its rent takings had fallen by two-thirds and that they had received a flood of requests for rent deferrals or waivers as the majority of its tenants had been forced to close their stores during the lockdown.
The question which Croydon shoppers who use Centrale might ask now is: who might move into the large store space about to be vacated by Debenhams?
It’s probably a question which will be troubling the management at Hammerson, too, after they spent yesterday dealing with collapse of £400million deal to sell seven of their retail parks.
Without that cash injection or any rent from other empty department stores, Hammerson is unlikely to have any appetite any time soon to spend cash on building even a much-reduced shopping mall in Croydon.
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