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Suppliers’ fears for Debenhams mount

Suppliers have expressed concern about the future of Debenhams following last week’s revolt by Mike Ashley at the retailer’s annual general meeting.

Sports Direct owner Ashley, who also owns almost 30% of Debenhams, managed to win enough votes on 10 January to force chairman Sir Ian Cheshire to resign, and to remove chief executive Sergio Bucher from the board.

In a statement Debenhams said the board still had “full confidence” in Bucher as CEO and that it was in the “best interests of Debenhams that the executive team remains fully focused on delivery of the [turnaround] plan.”

It added that the board is “committed to delivering the appropriate capital structure to ensure a sustainable and profitable future for all stakeholders”.

Several Debenhams’ suppliers believe Ashley may be planning to mount a takeover bid.

“It makes perfect sense for Mike to swoop in and buy it,” said one supplier. “He has a lot of money and, if you put Debenhams and House of Fraser together, you have a premier department store with some very good real estate.”

He continued: “The industry is in the middle of a storm and it needs stability. There is so much bad news out there. A lot of brands have no credit insurance with Debenhams, so if Ashley takes over it may not be a bad thing for brands.”

The managing director of a footwear brand stocked by Debenhams said: “Ashley is trying to undermine the management and push them out. Why didn’t he make a formal approach to take over the business instead of offering a £40m loan? He doesn’t want to pay a premium.

“We are monitoring the situation very closely. Debenhams will survive if it has an aggressive plan to close more stores, [but it won’t] without the support of the people delivering goods.

“The encouraging thing is that payments are being made on time. When they’re not, that’s when you really need to worry.”

One womenswear supplier said a take-over bid by Ashley would give him a monopoly over brands on the high street: “I think the idea is to merge [Ashley’s Irish department store chain] Heatons, Debenhams and House of Fraser.

“As the multi-brand chain will be so big and brands are still feeling the heat from the House of Fraser fallout, it will be very difficult for them to refuse to continue to work with them.”

One brand manager said he was worried about the “overall health” of Debenhams: “We’ve had our credit insurance cut. Some brands are walking away from Debenhams because the risk is too high. We’re deciding what to do. We’ve received the order, but we’ve not confirmed it.”

Drapers has contacted Sports Direct and Debenhams for comment. 

Readers' comments (1)

  • darren hoggett

    Ashely should buy Debenhams and merge it with HOF and quick. They need each other a the current status quo doesn't suit either parties in my view.

    What then becomes of the branding? Three options in reality;
    • Keep the stores identities separate
    • Brand all stores as one (e.g HOF)
    • A new brand for all remaining stores.

    The third option looks the most logical in the longer term. The Debenhams brand is long in the tooth and lacks aspiration. House of Fraser have struggled for many years, arguably the consumer may have lost confidence in it after the administration and lacks inclusivity, so a complete rebrand makes the most sense by far with a scaled down and proportionate operate that could be very effective.

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