Debenhams rescue is hanging by a thread

A white knight rescue of Debenhams was last night hanging by a thread, with a final decision by suitor JD Sports expected within days. 

The potential deal – understood to include a raft of stores and the chain’s online business – is widely seen as the last chance to save the high street stalwart from a painful breakup in the New Year. 

But City sources said there is growing nervousness this weekend over whether a deal can be agreed. 

Hanging by a thread: City sources said there is growing nervousness over whether a deal can be agreed

Hanging by a thread: City sources said there is growing nervousness over whether a deal can be agreed

Hanging by a thread: City sources said there is growing nervousness over whether a deal can be agreed

One said an agreement felt ‘further away’ than at any time over the past fortnight and another described the situation as being ‘on a knife edge’. 

The imminent collapse of Sir Phillip Green’s Arcadia empire is thought to have played a signifcant part in the growing hesitance of JD Sports to complete the deal.  

Arcadia, Debenhams’ biggest concession holder, is to appoint administrators from Deloitte as soon as this weekend.

If JD drops out, the only potential buyer for the entire business, which employs 12,000 people and trades from 124 UK stores, would be Sports Direct billionaire Mike Ashley.

If no credible buyer can be found for Debenhams, the chain is expected to shrink by more than half in the New Year – or even call in insolvency experts to offer parts of the business to other high street retailers. 

JD Sports’ chairman Peter Cowgill is understood to have agonised over a potential bid during the past few days. 

He believes his successful group has the retail skills to turn the business around but knows it would also face the uncertainty of more pandemic restrictions into next year, which could hamper efforts to reverse the 120-store chain’s fortunes. 

Sources said a final decision from JD Sports is expected this week ‘either way’. 

Several sources said Tuesday evening would be the ‘crunch point’, with a liquidation of unsold Debenhams stock likely to begin when stores reopen on Wednesday. 

Debenhams, which employed around 22,000 people, was struggling even before the Covid-19 outbreak

Debenhams, which employed around 22,000 people, was struggling even before the Covid-19 outbreak

Debenhams, which employed around 22,000 people, was struggling even before the Covid-19 outbreak

One retail source familiar with the deal said: ‘Even in the good times, this would be a monster of a deal to put together and these are not good times. 

‘JD has to weigh this up against all the other opportunities it might have – including its own core business which is extremely successful – and put that against Debenhams and everything it would need. 

‘There is huge uncertainty in the world at the moment – another lockdown potentially looming – and most of that is not in JD’s control. 

‘In the circumstances, this deal has got to be spot on for it to work for the JD board. 

‘Could they do this deal and make Debenhams a success? Of course. But at what cost in time and financial resources?’ The impending collapse of Sir Philip Green’s Topshop to Dorothy Perkins Arcadia Group – a major supplier to Debenhams – is another major curveball for any deal. 

Debenhams, founded in 1778, called in administrators for the second time in a year in April. 

The Mail on Sunday reported in August that Mike Ashley, the Sports Direct to House of Fraser tycoon, wants to buy around 30 Debenhams stores. He has made two bids but his offers are said to have undershot the £300million asking price by around half. 

This weekend, the MoS can reveal that Ashley is also being linked to a possible deal to buy one of Britain’s biggest shopping malls. The mogul, who declined to comment, is understood to have expressed an interest in the Trafford Centre, Greater Manchester. 

City sources said Ashley has yet to make a formal bid for the 150-shop centre, which is within a 45-minute drive for one in ten of the UK population. It is being sold as part of a break-up of shopping centre group Intu, which collapsed in June. 

The revelations are the latest in a monumental carve-up of Britain’s retail landscape amid the growing concerns that Arcadia is on the brink of appointing administrators. Deloitte will step in unless a deal to rescue the business can be struck early next week. 


High street giants including Marks & Spencer and Next are lining up as potential suitors for parts of Arcadia, particularly 

Topshop, say City sources. Topshop, the largest business in the group by far, is likely to be the prime target of most potential bidders. 

Ashley has also expressed an interest and there is speculation that online fashion giant Boohoo may take a look. 

City sources, who declined to be named, said Rowe and his rival Lord Wolfson, chief executive at Next, are both ‘in the market’ to pick up bargains from the collapse of Arcadia amid what was ironically described by one source last night as ‘the high street’s biggest ever sale’.

The fate of Green’s empire has been inextricably linked with Debenhams. Many of his brands – which include Wallis, Topman, Miss Selfridge, Evans and Burton – are sold in Debenhams stores and online. 

Clive Black, head of research and retail expert at City stockbroker Shore Capital, said: ‘Next, Marks & Spencer – most of the major retailers surviving this pandemic – will be casting their eye over the Arcadia portfolio.’ 

He added: ‘Topshop as a brand was motoring a few years ago and had a lot of cachet.’ 

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