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‘Ghost town’ fears as Debenhams and Arcadia restructure

As landlords ready themselves for restructurings at Debenhams and Arcadia Group, retailers fear that already struggling high streets will become “ghost towns” if they make widespread store closures.

On 22 March, Arcadia Group appointed property adviser GCW to work with consultancy firm Deloitte on restructuring the business, which could include a possible company voluntary arrangement (CVA). 

The same day, Debenhams asked its existing lenders for a £200m cash injection, to allow the retailer to enter into new funding facilities and give it the ability to pursue restructuring options – including a CVA, debt-for-equity swap or pre-pack administration – to secure its future.

However, some of the changes would result in no equity value for the company’s existing shareholders. Lenders have until 5pm on the 28 March to approve the deal. Sports Direct, which owns 30% of Debenhams, has since expressed interest in making a cash offer for the struggling department store and has until 22 April to announce a firm intention to make an offer.

Industry leaders have told Drapers they are concerned for the future of the high street if both companies launch insolvency processes, and called for landlords to take more responsibility.

“Clearly it is a worry. A successful CVA process, especially in the case of Arcadia, creates two big issues,” said Fergus Patterson, managing director of Swedish brand Gant. “First, if stores close, we get even more empty high street units, making for a less attractive shopping experience. Second, the stores that survive will potentially receive some form of rent reduction, creating an unequal playing field.”

Patterson added: “The solution is not easy, but what I would like to see is retailers and landlords starting to move towards more of a win-win rental structure. The days of upward-only rent reviews have to end, and the government needs to urgently review business rates. If action doesn’t happen soon, there could be a lot of ghost towns developing in the next few years, not to mention the job losses.”

One industry veteran agreed: “There will be short-term distress if those businesses have to close a raft of stores. Some towns will struggle, even if the CVA is strategic. It will cause quite a challenge for regional high streets where Debenhams is an anchor site.

“Landlords have got to bear responsibility. If [landlords] stick their heads in the sand, we will see high streets and shopping centres crumble away.”

One retail chief executive said such high-profile CVAs could have a big impact on landlords: “If Debenhams and Arcadia do a CVA, the real effect will be on landlords. They will have to take it or leave it. There will be a whole new arena of how rents are issued.”

Property insiders have told Drapers that landlords are more willing to compromise with Debenhams on rents than with Arcadia.

“There’s a lot more sympathy from the landlord community towards Debenhams,” said one property source.

“They will not have any sympathy for Arcadia’s CVA restructuring. [Arcadia] moans that rents are too high but that’s not the problem with the business. They’ve been very slow to multichannel [retail], and the reputational damage caused by Sir Philip Green is really hurting Topshop.”

Jonathan De Mello, head of retail consultancy Harper Dennis Hobbs, said landlords are frustrated with Arcadia: “[Landlords] will push back quite hard and suggest that it’s not right do a CVA when they’ve already had rent reductions as [Arcadia boss Sir Philip] Green has been closing stores for the past 10 years.”

One property source said the case will be starkly different with Debenhams: “If [Debenhams] do a CVA, landlords will try to do everything possible to accommodate them because the stores that remain will be very valuable and they will need those anchor units in shopping centres.”

Another property source added: ”Landlords have been proactively working with Debenhams for some time. The reality is that Debenhams have been unable to engage because they have been focused on their debt. Landlords want to work with Debenhams to see that business survive and come through. They don’t want to see it fall into administration.”

Arcadia and Debenhams declined to comment.

Drapers Investigates: the evolving relationship of landlords and retailers


  • Arcadia Group has 2,157 points of sale in total across its seven fascias in the UK 
  • It has 571 standalone stores 
  • The company has closed around 210 shops over the last two years 
  • Arcadia said it would not close a ”significant” number of stores 
  • More than 19,000 employees globally


  • Debenhams has 182 stores across the UK, Republic of Ireland and Denmark
  • It also has a number of franchised stores in international markets 
  • The company announced in October that it plans to axe up to 50 underperforming stores over the next five years 
  • The department store chain employs around 26,000 in the UK, Republic of Ireland, Denmark and in sourcing officers in Hong Kong and Bangladesh 



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