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Debenhams Secures Funding As First Step In Rescue Plan

Published on: 13 Feb, 2019
Updated on: 15 Feb, 2019

By Hugh Coakley

Debenhams announced yesterday (February 12) that it had secured £40m funding in a bid to “deliver a sustainable and profitable future” for the department store chain.

Debenhams is 29% owned by Mike Ashley, boss of Sports Direct and House of Fraser.

Shares in the company have steadily dropped from more than 90p per share in 2015 to less than 3.5p yesterday (February 12) and there had been three profits warnings last year.

Last year, Debenhams had announced that it would close up to 50 of its 165 stores within three to five years. The funding deal announced yesterday as a “first step in our refinancing process” could mean the closure of around 20 stores being brought forward to this year

The location of the stores to be closed is yet to be revealed by the company. Staff in the Guildford branch said that they had heard nothing formally but had been told “they were ok.”

Debenhams basement ‘mothballed’ in late 2018 after a difficult year of trading.

The store closed its basement floor last year indicating the pressure on retailers as people increasingly chose to shop online rather than in the high street.

Mike Ashley bought the House of Fraser department store out of administration in 2018. He also has 29% of Debenhams shares. With a single owner having a major interest in both of Guildford’s struggling department stores questions about the likelihood of both surviving have been raised. The House of Fraser store is only about 200m from Debenhams.

Additionally, the Guildford branch of Debenhams, while being on an attractive riverside plot, is isolated from the town’s main shopping area by the busy A281 road.

Their connection to the High Street was weakened when the underpass linking the store with the High Street was closed. This is thought to have reduced footfall to the store.

Backing onto the River Wey, the Riverside Restaurant has been a popular destination for Guildford’s shoppers since it opened in 1968.

 

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