Will Debenhams in Ipswich survive new financial concerns for store group?
- Credit: Archant
Town centre bosses around the region are watching with concern after department store group Debenhams issued another profits warning and saw its share price slide again.
The company, which has major stores in Ipswich, Colchester and Bury St Edmunds, told the stock market that during the 26 weeks to March 2, sales fell by 5.3%. That prompted a further fall in its share value to 2.8p a share.
Retail experts believe that it is now a matter of time before Debenhams is forced into administration or has to seek a CVA (Company Voluntary Arrangement) to pay off its debts.
That could put a question mark over the future of individual stores. Debenhams is the largest store in Ipswich town centre, it has the largest store on Bury St Edmunds’ Arc Shopping Centre – and a large store in the centre of Colchester.
Paul Clement, chief executive of Ipswich Central, said: “Debenhams’ situation is extremely concerning and this news adds to the concern.”
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The Ipswich store remains profitable as it is run at the present, but Mr Clement said the ultimate future of the Cornhill branch would depend on what happens to the company in the future.
Debenhams is not the only store in the town centre that is causing concern. The future of Marks and Spencer’s town centre stores across the country is being brought into question as that company is opening more out-of-town food stores that can also be used for click-and-collect purchases of clothes.
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Debenhams has already said it is looking to close up to 50 of its 165, and chief executive Sergio Bucher said: “We are making good progress with our stakeholder discussions to put the business on a firm footing for the future. We still expect that this process will lead to around 50 stores closing in the medium term.
“Our priority is to secure the best outcome for the business and all our stakeholders, whilst minimising the number of store closures and job losses.
“To do this, as we have said before, we will need the support of both landlords and local authorities to address our rents, rates and lease commitments.”
However many retail experts still expect the company to eventually be forced into a merger with Mike Ashley’s House of Fraser with many stores shutting across the country.