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What will happen to Debenhams now that it’s entered into administration?

Posted: 11 April 2019 10:09 am

debenhams store front Image: iStock

Image: iStock

Could this be the end for the high-street chain?

Online shopping may be a blessing for many of us, but for many retailers, it seems to be something of a death sentence. Every few months we get wind of another company entering administration and this time, it's none other than high-street UK chain Debenhams.

After struggling for some time Debenhams plc, the top holding company of the department store chain, has finally slid into pre-packaged administration. This means that the chain has been sold to lenders after the holding company rejected a last-minute financial support offer from company shareholder Mike Ashley's Sports Direct.

The move has already seen the closure of more than 50 stores and has put around 4,000 jobs at risk. So, what will happen next?

Senior retail analyst at GlobalData Sofie Willmott has said, "Debenhams has indeed been rescued by lenders – though store closures are inevitable. However, the business will still require significant investment to stand a chance of regaining consumer interest."

The Debenhams chain has 166 stores, but it is also in £621 million of debt. However, several buyers have shown interest in taking on the high-street chain including Mike Ashley, though he has repeatedly been refused by Debenhams' board.

With more and more consumers now choosing to shop online, Debenhams has been one of many retailers to struggle in the expanding market. We've seen it happen here in Australia with both Surfstitch and Oroton making announcements of voluntary administration after reporting weak levels of household spending growth. Luckily, both stores went on to survive.

The punches have kept on coming for Aussie stores though with both Dick Smith and Toys "R" Us recently entering voluntary administration. The Australian branch of Topshop, Payless Shoes, Marcs, David Lawrence, Napolean Perdis and Roger David have also all joined the list of stores faltering under the weight of a tougher shopping market.

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