Debenhams has fallen into administration, casting fresh doubt over the future of the struggling chain, which employs more than 20,000 people.

Like other fashion retailers, Debenhams is facing financial turmoil as the coronavirus lockdown prevents Britons from shopping. However the indebted retailer had problems prior to the health crisis and on Thursday confirmed the appointment of restructuring firm FRP Advisory to handle a “light touch” administration of the 142-store chain.

Debenhams said administrators would work alongside existing management to “get the business into a position to re-open and trade as many stores as possible again when restrictions are lifted”. However it also warned that FRP Advisory would be putting its Irish chain into liquidation which would mean the permanent closure of 11 stores that employ around 1,260 people.

Stefaan Vansteenkiste, chief executive of Debenhams, said: “We are desperately sorry not to be able to keep the Irish business operating but are faced with no alternative option in the current environment.”

The Irish chain, which includes four branches in Dublin and two in Cork, employed 958 Debenhams staff as well as 300 others who worked for in-store concessions. The staff have already been stood down under the Irish government’s wage support scheme.

It was anticipated that Debenhams’ owners and lenders would make additional funding available to fund the administration period, Vansteenkiste said. “In these unprecedented circumstances the appointment of the administrators will protect our business, our employees and other important stakeholders, so that we are in a position to resume trading from our stores when government restrictions are lifted.”

The retailer’s stores are all closed anyway due to the government-mandated shutdown, although its website is still operating as normal. The majority of its UK workforce has also been furloughed.

Debenhams, which is hobbled by a £600m debt pile, was listed on the stock exchange until last April, when its deteriorating finances resulted in an administration that wiped out shareholders and transferred ownership to a group of financial investors that includes the US hedge funds Silver Point and GoldenTree.

Like other struggling chains, it has used an insolvency process known as a company voluntary arrangement (CVA) to cut rents and close unprofitable stores including a group of 19 shops in January. Since the coronavirus lockdown it has written to landlords asking for a five-month rent holiday and written to the suppliers to inform them they would be getting their money a month later than expected as it seeks to conserve cash.

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Sofie Willmott, a retail analyst at consultancy firm GlobalData, said Debenhams’ second administration in 12 months was “stringing out its demise and its long-term future remains bleak”.

She said: “With significant further investment in the business now very unlikely, it is difficult to see what will attract shoppers back once its stores can reopen.

“The department store chain was already in trouble before the Covid-19 pandemic hit and the sharp shift in consumer shopping habits will only speed up inevitable changes in the UK market. Weaker retailers without a unique selling point will be weeded out, with many unable to survive the year.”



Debenhams Ireland stores to close permanently

Cork - Mahon Point

Cork - Patrick Street

Dublin - Blackrock

Dublin – Blanchardstown

Dublin - Henry Street

Dublin - Tallaght

Galway

Limerick

Newbridge

Tralee

Waterford