Debenhams may shut stores in a bid to save chain from closure
The chain is considering a range of options to keep the business alive following plummeting share prices, including possible store closures and job losses
TROUBLED Debenhams has called in advisers to help save the chain, and is considering its options which include store closures and insolvency.
The embattled department store chain is fighting to keep its 240 stores open following a sharp fall in profits and tumbling share prices as consumers turn to online shopping.
After issuing three profit warnings this year, the chain had already announced plans to cut up to 90 jobs at its headquarters and 320 store management jobs.
Its troubles come just a month after House of Fraser, another staple UK department store chain, collapsed into administration.
Now to turn around Debenhams' falling fortunes.
A CVA allows a struggling business to keep trading while it makes a plan to pay off its debts.
Debenhams identified 30 stores that could be resized - but has been held up by long and inflexible leases.
told the BBC: "The fact KPMG have been brought in does not surprise me. Debenhams will be wanting to look at all the options open to them.
"The harsh reality is that they are operating in one of the most challenging parts of retailing at the moment.
"Consumers are increasingly shopping online, and they are also spending more on things like holidays and the experience economy.
"The other part of the pincer movement Debenhams is facing is that they are being squeezed on costs, with things like increasing rents and business rates, and rising wage and utilities bills.
"It all means that department stores are incredibly expensive to operate."
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Sports Direct boss Mike Ashley, who bought House of Fraser out of administration and who owns just under 30 per cent of Debenhams, is understood to be keeping a close eye on the latest developments.
The chain has lost more than 90 per cent of its market value since 2006, when it was relisted on the London Stock Exchange after being taken private in 2003.
As a result of the news, Debenhams shares dropped more than 17% in morning trading.
The store issued an emergency statement to try and calm traders.
It has said it expects full-year pre-tax profits of around £33 million before exceptional items, which is within the current market range of £31 million to £36.5 million.
Underlying earnings are forecast to come in at £157 million, with net debt of approximately £320 million.
Debenhams assured that it has continued to strengthen its financial position.
Chief executive Sergio Bucher said: "The market environment remains challenging and underlying trends deteriorated through the summer months.
"Nevertheless the product and format improvements we have tested are gaining traction and we are ready to scale up some of our strategic activity ahead of peak.
"Having put in place a leaner operational structure and strong leadership team, and taken action to strengthen our financial position, we are well equipped to navigate these market conditions and take advantage of any trading opportunities that emerge."
Chairman Ian Cheshire reiterated that the board is continuing to work with its advisers "on longer term options, which include strengthening the balance sheet and reviewing non-core assets.
He said: ";This activity is in order to maximise value for shareholders and protect other stakeholders, including our employees."
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