// Debenhams chairman denies retailer is on the brink in an interview with BBC News
// Mark Gifford also insists trading is better than expected
// He also says Debenhams has £50m more money in the bank than initially forecast when it went into administration
Debenhams chairman Mark Gifford has said the department store chain is far from being on the brink of collapse and insisted that trading has been better than expected.
In an interview with BBC News, Gifford said Debenhams has more than £95 million in the bank which is more than £50 million higher than it had expected to have at this point when it went into administration in April.
“That’s really changed the whole complexion and prospects,” he said.
Earlier this week, advisers from Lazard – the investment firm working with Debenhams since the business was put up for sale in July – had asked interested buyers to submit offers by Tuesday 5pm.
However, the deadline passed with no immediate resolution, with reports suggesting it was only a “checkpoint” to confirm if there was interest in a rescue deal.
Debenhams reportedly wanted to strike a deal by the end of this month otherwise it would start exploring other options, prompting speculation that the business was on a cliff edge of sorts.
Last month, restructuring firm Hilco Capital was drafted in to work on “contingency plans” for Debenhams, should a sale or any other rescue be unsuccessful and it falls into liquidation – a last resort that would place more than 12,000 jobs at risk.
READ MORE:
- Debenhams’ deadline for takeover bids passes but rescue talks continue
- Debenhams owner on brink of administration
- Debenhams cuts 2500 jobs in latest redundancy round
However, Gifford stressed that Debenhams was in no rush to reach a deal by the end of this month.
“Because we’ve been able to build this amount of cash within the company, the administrator can work with the management team to continue to trade the business,” he told BBC News.
Despite this, Gifford conceded that it was likely Debenhams would remain in administration until early next year, and that the consortium of lenders that owns the retailer – known as Celine – has big decisions ahead.
Nonetheless, he reiterated that Debenhams “has a viable future” thanks to recovering sales.
“[Celine is] looking at how our sales are recovering. They’re looking at the available cost-saving opportunities so this business has a viable future,” Gifford said.
“And so they’re looking at it optimistically, but they have to take a business decision before they conclude anything.
“We’re in our 13th week of trading [since lockdown] and it’s very early days.
“There’s no pressure for them to reach a conclusion given where we are. But we’ve got their support.”
There has been no confirmation as to who or what businesses have expressed interested taking over Debenhams in part or as a whole, but speculation has been rife that Mike Ashley’s Frasers Group, Next and a Chinese consortium have all mulled the opportunity.
Even if a sale is agreed, one of the potential scenarios reportedly being discussed by buyers is liquidating more than half of Debenhams’ store estate – leaving it with 60 sites – due to an unlikeliness of bidders wanting to take on the entire business as it currently stands.
When Debenhams entered administration at the height of the coronavirus lockdown in April, it marked the second such insolvency within a year.
However, this time it’s a “light touch” administration, meaning directors are still running the retailer rather than handing it over to the administrators.
Debenhams permanently shut down 20 stores and slashed an estimated 6500 jobs since the pandemic gripped the UK in March – 2500 of which was confirmed just last month.
Before lockdown, Debenhams had around 140 stores and was in the midst of a CVA restructure, which it launched after the first administration.
The CVA led to several store closures immediately after the peak Christmas trading season.
Debenhams now trades from 124 stores in the UK, plus another 45 sites across 17 countries in Europe, the Middle East and Asia under various franchise agreements.
Separately, last month Celine reportedly hired Philip Watkins and Philip Armstrong from FRP Advisory as advisers to prepare its own administration.
The move means the firm does not have to pay overdue interest payments on £200 million of bonds. It had reportedly been due July 15.
Celine going into administration would not have any impact Debenhams’ sales, staff, customers or suppliers.
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