Debenhams has defended its partnership with beauty app Blow after reports emerged that the retailer’s financial woes had soured the relationship.
The department store announced a strategic partnership with Blow last September, and has since added three beauty concessions in its stores with another two planned for this autumn.
However, the Sunday Times reported that Blow has refused to commit to any new spending with Debenhams, which has announced three profit warnings since the deal was agreed.
Blow, estimated to be worth around £50 million, is understood to be seeking a new buyer with a view to withdrawing from its partnership.
Potential investors include health and beauty retailer Boots, and international brands like Unilever and Coty.
This would mean the £7.5 million sum Debenhams paid for a 20 per cent stake in the business last year would be repaid.
In response to the report, Debenhams and Blow released a joint statement saying: “Blow and Debenhams have established a strong partnership and continue to work together to grow beauty services in Debenhams stores.
“Debenhams’ digitally integrated beauty hall of the future, incorporating Blow beauty bars, will open in stores at Meadowhall and Watford this autumn.”
This marks the latest blow for Debenhams, which saw its insurer Euler Hermes reduce its cover amid concerns it was struggling to pay its bills in full and on time last week.
Other credit insurers Atradius and Coface have also reportedly refused to cover new shipments for Debenhams in recent days.
Suppliers purchase credit insurance to ensure their losses would still be covered should a retailer collapse.
Last month, Debenhams issued yet another profit warning and announced plans to offload its Danish department store fascia Magasin du Nord to shore up its finances.
Debenhams blamed competitor discounting and market weakness when it issued its recent profit warning.
The department store retailer said the challenging market conditions resulted in “below plan” trading in May and early June, despite weak comparatives, forcing it to “reassesses” expectations for the remainder of the year.
The chain now expected full-year pre-tax profits to come in between £35 million and £40 million, down from previous City estimates of £50.3 million.