Shares in UK high street retailer Debenhams,which has 16 stores in the Republic and the North, plunged over 10% as it confirmed it was considering “longer-term options”, including possible further store closures.
It is the latest blow to UK high street retail, which has been reeling from intense competition from online shopping and changing consumer habits in recent months, leading to chains such as Toys ‘R’ Us and Maplin closing.
The woes in Britain are hitting Ireland too. Struggling House of Fraser was taken over last month by Sports Direct owner Mike Ashley, who has an almost 30% stake in Debenhams.
Mr Ashley slammed Debenhams earlier this year, saying he would be “smashing into them over why they cannot follow anything that Sports Direct suggests”.
The Irish division of Debenhams has 11 stores in the Republic across Dublin, Cork, Galway, Limerick, Waterford, Newbridge, and Tralee. There are also five stores in the North, in Belfast, Derry, Newry, Craigavon, and Ballymena.
The Irish stores have become synonymous with main city streets, including Henry St’s Ilac Centre in Dublin, and St Patrick St in Cork, where it took over one of the city’s most iconic flagship shops, Roches Stores, in 2006.
Debenhams Ireland exited examinership in 2016, with the loss of nearly 100 jobs. The chain has 27,000 employees in the UK and has issued three profit warnings this year alone.
The shares plunged yesterday amid reports Debenhams had enlisted KPMG to examine options including a company voluntary agreement (CVA), which a number of struggling UK high street retailers have employed in recent months.
CVAs permit retailers to close stores and renegotiate rents in order to avoid administration or insolvency.
The firm made no comment on potential store closures in Ireland. Reports suggested it had identified 30 stores in the UK that could be restructured.
In a statement, the company said it will issue preliminary results on October 25. It expects to report pre-tax profits of around £33m (€37m) for 2018, as well as earnings before interest, tax, depreciation, and amortisation of £157m.
We anticipate year-end net debt will be approximately £320m, in line with guidance and retaining significant headroom on our £520m medium-term facilities
It said it has continued to strengthen its financial position in order to give it “comfortable liquidity through the peak borrowing period, ensuring maximum flexibility amidst volatile market trading conditions”.
The early weeks of the new season have shown more positive trends and any sustained upturn would result in a rebound in profit performance, said Debenhams.
Meanwhile, Primark owner Associated British Foods (ABF) said the chain has performed well in the UK, with full-year sales set to be 6% ahead of last year. It did not break down the Irish performance, where it operates as Penneys.
A spokeswoman said: “We are very pleased with the development of the Penneys business in Ireland this year. It is the home of ABF’s fashion retail business, which has sales across all markets of some €8bn.”
Following a fire that gutted the £30m front section of it Belfast store last month, ABF said “the replacement cost of the building and resulting business interruption is insured”.