Struggling retailer plans to shut a total of 50 shops but has yet to confirm all locations

Debenhams has dealt a fresh blow to Britain’s struggling high streets with plans to close 22 department stores , putting 1,200 jobs at risk.

The closures are just a first wave of shutdowns, as the retailer intends to pull down the shutters on a total of 50 of its worst-performing stores, but has yet to confirm the locations of the remaining shops at risk.

The full closure plan, which equates to one in three of its stores, is expected to trigger thousands of job losses. The department store chain currently employs 25,000 staff.

Terry Duddy, the executive chairman of Debenhams, which was taken over by its banks a fortnight ago, said it had too many stores at a time when shoppers were increasingly buying online. The retailer revealed that its sales had tumbled 7.4% in the last six months. Duddy said: “Our priority is to save as many stores and as many jobs as we can, while making the business fit for the future.”

At the start of this month, Debenhams, was put through a pre-pack administration that wiped out shareholders, including Mike Ashley’s Sports Direct which wanted to mount an alternative rescue deal. Its new owners, who are a consortium of banks and hedge funds, have launched the major store-closure programme via an insolvency process known as a company voluntary arrangement (CVA).

In March, the indebted chain secured a £200m package of new loans and so far 166 UK stores have continued to trade as normal. The first tranche of 22 stores will close their doors after trading through the key Christmas period.

Usdaw, the shopworkers’ union, said it was devastating news for staff who had the threat of closures hanging over them for months. “They [Debenhams staff] have been left on the sidelines as a game of corporate monopoly has been played out in the media,” said Usdaw national officer Dave Gill. “It is devastating news for staff in the stores announced to today and the threat continues in every other Debenhams store.”

The affected stores are dotted around the UK and include city locations such as Birmingham and Wolverhampton, as well as towns such as Ashford in Kent and Kirkcaldy in Scotland.

Smaller shopping destinations are bearing the brunt of closures with Ashford and Kirkcaldy also affected by Marks & Spencer’s store closure plan. In Altrincham, which is also on the list, it has been announced that the House of Fraser is closing.

A growing number of retailers, struggling as sales shift online, are using CVAs to scale back their high street presence and reduce rent bills. Considered a last resort for ailing chains, the plan must be signed off by landlords and other creditors. A recent report showed chain stores are disappearing from UK high streets at the fastest rate in at least nine years.

Last year New Look, Mothercare and Carpetright, deployed CVAs to reduce the size of their chains and there are several new ones in the pipeline.

Sir Philip Green is working on a CVA designed to close dozens of stores within his Arcadia fashion empire, as is Outdoor & Cycle Concepts (O&CC), the group behind high street chains such as Cotswold Outdoor, Runners Need and Snow+Rock.

The use of the insolvency procedure means that until the CVA is approved by Debenhams’ creditors its pension schemes will automatically be assessed for a rescue by the Pension Protection Fund (PPF), the industry funded pensions lifeboat. If the plan is approved at a vote on 9 May, its pensioners will continue to be supported by the restructured company.

A spokesman for the Debenhams Pension Schemes said pensions would continue to be paid as usual during the CVA consultation period: “The CVA does not seek to compromise or reduce the employer’s obligations to the schemes. The trustees hope the CVA will be successful and … will ensure that the schemes are supported in the long term.”

The CVA, which is being handled by accountancy firm KPMG, is also asking Debenhams’ landlords to agree to big rent cuts.

It is willing to keep paying the agreed rent on 39 stores but is demanding rent reductions of between 25% and 50% on the other 127.

A CVA requires the approval of creditors holding at least 75% of a company’s debts to succeed. To soften the blow landlords are being offered a £25m compensation fund.

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KPMG’s Jim Tucker, who is overseeing the process, sought to reassure the retailer’s staff and supplier base, saying: “No stores will close on day one, suppliers will continue to be paid by the company on time and in full, and terms of employment are not impacted.”

Jonathan De Mello, the head of retail consultancy at Harper Dennis Hobbs, said: “Debenhams was always an accident waiting to happen, given the large volume of underinvested stores in many locations that are now too small to sustain a department store as shopper habits have changed.”

O&CC is also asking its landlords to reduce its rent bill as part of a restructuring plan that will enable it to jettison loss-making stores.

The group wants to use a CVA to close up to seven stores and negotiate cheaper rent on another 50 branches from its 115 outlets in the UK and Ireland.

Sales at O&CC, owned by the Paris-based private equity firm PAI Partner, have declined amid a sharp fall in the number of shoppers visiting the high street and intensifying online competition.

Jose Finch, O&CC’s managing director, said: “We have started to engage with key stakeholders, suppliers and property landlords to explore all options. It is vital that we make the right choices that will ensure we create a strong future together. The future of O&CC is in our hands and it will require hard work, commitment, sacrifices, and a strong focus on our day-to-day improvements.”

The process is being overseen by Matthew Richards, a director at the advisory firm Grant Thornton, who said the CVA would provide a stable platform for its turnaround plan. “We have engaged with the British Property Federation and its members and we believe the CVA is a fair proposal,” he said.