// Debenhams officially launches CVA
// Full list of 22 stores due for closure released
// The move places 1200 jobs at risk
// Debenhams also reported continued poor trading in an interim trading update
Debenhams has officially launched its CVA which will see it close 22 of its underperforming stores as early as next year, placing 1200 jobs under threat.
Last week it was confirmed that Debenhams chief executive Sergio Bucher was set to resign with a pay-off thought to be around £700,000.
Chairman Terry Duddy has since taken the reins in the interim as executive chairman while a search for a new chief executive is conducted.
The embattled department store had appointed administrators who immediately sold the PLC part of Debenhams to a newly-incorporated company controlled by secured lenders in a pre-pack administration deal in return for reducing the retailer’s £600 million debt.
It is now controlled by a consortium of banks and hedge funds, who have confirmed the launch of a major store closure programme via a CVA insolvency process, which will eventually see it close 50 of its worst performing stores.
“The issues facing the UK high street are very well known,” Duddy said.
“Debenhams has a clear strategy and a bright future but in order for the business to prosper, we need to restructure the group’s store portfolio and its balance sheet, which are not appropriate for today’s much-changed retail environment. Our priority is to save as many stores and as many jobs as we can, while making the business fit for the future.”
A full list of those due to close is as follows:
- Birmingham Fort
- Great Yarmouth
- Welwyn Garden City
The department store also used its CVA announcement to reveal an interim trading update, where like-for-likes crashed 5.2 per cent in the half-year period to March 2.
UK in-stores sales were down 7.4 per cent, although overall UK sales fell 5.4 per cent.
International sales dropped by 4.8 per cent and UK gross transaction value declined 5.4 per cent to £1.23 billion.
Meanwhile, while UK EBITDA dropped 48 per cent to £37.1 million and international EBITDA declined 9.7 per cent.
Debenhams’ net debt stood at £417.4 million on March 2, several weeks before it had announced a £200 million refinancing deal in addition to its existing facilities of £520 million.