Up to 60 Debenhams stores could close even with JD Sports rescue deal
Analysts believe that up to 60 Debenhams stores could still close next year despite JD Sports reportedly being in exclusive talks to acquire the entire business.
That would see the chain just about cut in half, with thousands of its 12,000 jobs at risk as a result.
But it’s seen as increasingly unlikely any potential buyer would want to take on the whole chain, which isn’t only Britain’s oldest department stores business but is also its largest.
The UK department stores sector has shrunk in recent years with a number of business failures and chains such as John Lewis, House of Fraser and Debenhams itself also closing branches.
Yet with the prospect of mass store closures, the alternative for Debenhams could be liquidation, which would have an even more devastating impact on jobs.
JD Sports is reportedly most interested in the Debenhams web business, but could take on around half of its stores in line with a restructuring plan set out by its current owners as part of the prospectus for its sale.
But it’s interesting that the markets seem to have little confidence in Debenhams’ prospects. JD Sports’ shares fell 6% this week on news of the exclusive talks and they continued to fall on Wednesday morning, even though they’re still more than double where they were in the depths of the stock market crash in March.
While JD is known for buying and turning around distressed business, it’s not operated a department store before. And there’s a not-very-encouraging precedent for a giant sports business buying a struggling department store. Sports Direct (now Frasers Group) may have taken the Frasers name, but it has found the House of Fraser chain to be problematic since it took it over. There’s no guarantee, in even tougher retail conditions than Sports Direct faced, that JD would find it any easier.
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