Debenhams cuts 2,500 UK jobs in latest blow to retail sector

Move comes after chain entered administration and closed 11 stores in Ireland in April

The Irish arm of Debenhams, which operated 11 stores in the country, was placed into liquidation in April. Photograph: Oli Scarff/AFP via Getty Images)

The Irish arm of Debenhams, which operated 11 stores in the country, was placed into liquidation in April. Photograph: Oli Scarff/AFP via Getty Images)

 

Struggling department store chain Debenhams is to cut a further 2,500 jobs in the UK, dealing the latest blow to the battered retail sector from the Covid-19 crisis.

Debenhams shed hundreds of head office jobs in May and its latest round of redundancies adds to thousands already announced by major British retailers, including Marks & Spencer, Boots, John Lewis and WH Smith.

The Irish arm of Debenhams, which operated 11 stores in the country, was placed into liquidation in April. The Irish store closures came after the UK parent company entered administration and ended its financial support of the Irish business.

Former staff in the Irish stores have been protesting over redundancy terms, claiming the package offered to them was unfair. About 950 staff were employed directly by Debenhams Retail Ireland, with an additional 500 workers at in-store concession stands operated by other retailers.

Official data, also published on Tuesday, showed the number of people in work in Britain has suffered the biggest drop since 2009 and signs are growing that the coronavirus will take a heavier toll on the labour market as the government winds down its huge job-protection scheme.

“We have successfully reopened 124 stores, post-lockdown, and these are currently trading ahead of management expectations,” Debenhams said in a statement.

“At the same time, the trading environment is clearly a long way from returning to normal and we have to ensure our store costs are aligned with realistic expectations.”

It said it would take “all necessary steps” to give Debenhams every chance of a viable future.

In April, Debenhams went into administration for the second time in a year, seeking to protect itself from legal action by creditors during the crisis that could have pushed it into liquidation. The retailer is owned by a lenders’ consortium called Celine UK NewCo 1 Ltd that includes US hedge fund Silver Point Capital.

Last month Debenhams, assisted by investment bank Lazards, started a process to assess ways for the business to exit administration.

It said there were a range of possible outcomes, including the current owners retaining the business, new joint venture arrangements with existing and new investors or a sale to a third party.

That process is due to run until the end of next month. - Reuters, PA