Mike Ashley’s Frasers Group is in talks to buy Debenhams out of administration, raising hopes of a last-ditch rescue for the 240-year-old UK department store chain.
Without a buyer, Debenhams would be wound down after Christmas, with the loss of up to 12,000 jobs and closure of 124 stores by the end of March. Liquidators moved in last week to start clearing stock after a potential rescue deal with JD Sports collapsed. Administrators have been trying to find a buyer for Debenhams since the summer.
In a brief statement, Frasers, formerly known as Sports Direct, confirmed that “it is in negotiations with the administrators of Debenhams’ UK business regarding a potential rescue transaction for Debenhams’ UK operations”.
It added: “While Frasers Group hopes that a rescue package can be put in place and jobs saved, time is short and the position is further complicated by the recent administration of the Arcadia Group, Debenhams’ biggest concession holder. There is no certainty that any transaction will take place, particularly if discussions cannot be concluded swiftly.”
Frasers also said, according to an emailed statement seen by Bloomberg: “We hope to be able to save as many jobs as possible.” Debenhams rents all its 124 stores, and if a deal is completed, Frasers could operate them on a 12-month licence while working out how many outlets could be saved, Bloomberg reported, citing an unnamed source.
The liquidation of Debenhams was announced a day after Philip Green’s Arcadia group, the owner of brands including Topshop, Miss Selfridge and Wallis, called in administrators, putting 13,000 jobs at risk.
Ashley, a retail tycoon who made his fortune with Sports Direct, has long had his eyes on Debenhams. He previously built up a near-30% stake in the business, which was wiped out last year when lenders took control of it. Frasers also owns House of Fraser, another department store chain, which it bought out of administration.
Adding to the high street’s woes, the fashion chain Ted Baker reported widening first-half losses and said it had laid off 953 people after Covid-19 lockdowns and other restrictions. Its pretax loss ballooned to £86.4m in the 28 weeks to 8 August, from £23m a year earlier. Revenues almost halved to £169.5m.
As the UK and EU remain stuck in Brexit negotiations, David Wolffe, Ted Baker’s chief financial officer, warned of the impact of a no-deal Brexit.
“There is material risk to our future profit if the UK is not successful in signing new trade agreements with the EU and other markets in which we operate,” he said. In the worst-case scenario, profits would be £16.1m lower if no trade deals are struck, he added.
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Mike Ashley’s Frasers Group hopes to save collapsed Debenhams