Debenhams chief says chain has ‘bright future’ despite announcing Southsea store closure

The retail giant has revealed it will be shutting 22 stores early next year, a move which puts 1,500 jobs at risk. 

Debenhams in Palmerston Road is one of the shops set to close its doors. 

Yet despite the announcement, the company’s executive chairman says they have a ‘bright future’. 

Terry Duddy said: ‘The issues facing the UK high street are very well known.

‘Debenhams has a clear strategy and a bright future, but in order for the business to prosper, we need to restructure the group's store portfolio and its balance sheet, which are not appropriate for today's much-changed retail environment.

‘Our priority is to save as many stores and as many jobs as we can, while making the business fit for the future.’

The group has announced a Company Voluntary Arrangement (CVA), which will see the affected shops continue trading until early 2020.

Further closures could still be announced following discussions with landlords. Meanwhile rent reductions will be sought on many of the remaining branches.

Debenhams went into a pre-pack administration earlier this month, wiping out the stakes of all shareholders including Sports Direct's Mike Ashley.

Creditors including landlords will have the opportunity to vote on the CVA in a process overseen by advisers at KPMG.

Jim Tucker, a senior restructuring partner at KPMG, said: ‘Today's announcement marks the next phase of Debenhams' financial and operational restructuring strategy, following the comprehensive funding package announced at the end of March.

‘If approved, and with the support of lenders and landlords, the CVAs will allow the business the flexibility to implement its turnaround strategy with a store estate that reflects the current UK retail environment.’

Debenhams also released a financial update for the 26 weeks to March 2, showing that sales at its UK stores declined by 7.4 per cent during the period due to weaker footfall.

Underlying earnings declined by 36.6 per cent to £65.9 million.