Collapse of Arcadia, Debenhams Puts 25,000 UK Jobs at Risk While Peers Gain, Race to Grab Brands -- Update
--Department store Debenhams will shutter its U.K. operations as
its sale process failed to find a viable buyer
--Debenhams' wind-down puts 12,000 U.K. jobs at risk
--Meanwhile, clothing retailer Arcadia also fell into
administration, putting 13,000 staff at risk
--Peers are gaining on the bust of the two large competitors and
are racing to secure brands from the collapsing chains
By Matteo Castia
A potential 1.8 billion pounds ($2.4 billion) of revenue from
Debenhams is up for grabs as British peers' stocks continue to rise
on the collapse of the large competitor, after the department-store
said its administrators are starting to wind down its U.K.
Debenhams--which is 232 years old--entered into administration
in April for the second time in two years, and said Tuesday that
its administrators FRP Advisory Group PLC have decided to shutter
the company's British business after a sale process failed to find
a viable buyer.
Sport-fashion company Frasers Group PLC in October attempted a
bid to take over Debenhams but failed to meet the GBP300 million
price demanded by Debenhams' administrators.
Meanwhile, sport-goods retailer JD Sports Fashion PLC said
earlier on Tuesday that it had terminated talks about taking over
"FRP Advisory have concluded the initial sale process that was
part of their assessment of options for the U.K. business in
administration [...] The sale process has not resulted in a
deliverable proposal," Debenhams said Tuesday, shortly after JD
The department store said it will continue to trade through its
124 stores in the U.K. and online to clear its stock, and will
close the U.K. operations if no alternative offers are received in
the meantime. Still, its 12,000 U.K. staff are likely to lose their
Debenhams said in August that it was planning to cut 2,500 jobs,
after having laid off staff in May and June, when it had to
permanently close several of its locations, including its head
Given the uncertain economic environment caused by the
coronavirus pandemic, a restructuring of the company is also highly
unlikely, Debenhams said on Tuesday.
A further potential GBP1.4 billion of revenue is for the taking
from clothing retailer Arcadia, which late Monday said it had
appointed administrators to the business and various
Arcadia employs around 13,000 people across 444 sites in the
U.K. and 22 overseas, meaning 25,000 U.K. jobs have been placed at
risk over a 24-hour period as a result of Debenhams and Arcadia
Before appointing its administrators, Arcadia rejected Frasers
Group's offer for a GBP50 million lifeline earlier on Monday, when
Mike Ashley's group said it would also be interested in bidding for
For Debenhams and Arcadia, the coronavirus has dealt the final
blow to already struggling businesses and opened up the race to
secure brands from the collapsing chains. According to U.S. bank
Citi, online fashion-retailer Boohoo Group PLC is in pole position
to take full advantage, thanks to its recent capital raise,
completed precisely to expand its portfolio.
Boohoo would be the most logical owner of Arcadia's Topshop and
Topman brands, while the remaining chains would better fit Marks
& Spencer Group PLC's customer base, the bank said.
"However, the lack of a compelling digital offer is clear and in
this regard, Next PLC's Total Platform makes sense if a third party
is prepared to invest in the Dorothy Perkins, Wallis or Burton
brands," according to Citi.
Arcadia's fall into administration caps off years of losing
market share to competitors, with the main beneficiaries in the
U.K. being online fashion-retailers Asos PLC and Boohoo, Swedish
clothing retailer H&M Hennes & Mauritz AB, and U.K.
conglomerate Associated British Foods PLC's clothing arm, Primark,
The potential closure of Debenhams is likely to be good news for
Primark, M&S and Next, Citi added.
At 1430 GMT, shares in JD Sports, Frasers Group, Next, H&M,
Boohoo, Marks & Spencer, Asos and AB Foods were rising, with
Frasers Group making the most progress, up 4.5% at 440.6 pence.
Write to Matteo Castia at email@example.com
(END) Dow Jones Newswires
December 01, 2020 10:03 ET (15:03 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.