Debenhams faces uncertain future as JD Sports quits rescue talks

JD Sports is expected to pull out of talks over a rescue deal for department store chain Debenhams on Tuesday.

It was the last remaining bidder for the firm, which is in administration, and up until the end of last week had been closing in on a deal.

But retail giant Arcadia is the biggest concession operator in Debenhams and

its collapse is understood to have been a factor in JD Sports’ decision.

Without a buyer, Debenhams could be wound down, risking thousands of jobs.

The company had already cut about 6,500 jobs since May, and now has 12,000 workers across 124 stores.

The 242-year-old retailer had been considering a potential sale since the summer after it went into administration in April for the second time in a year.

The news that Arcadia has collapsed into administration, after the Covid-19 pandemic hit trading, has further complicated matters.

Arcadia’s brands, such as Miss Selfridge and Dorothy Perkins, are sold across Debenhams stores. They account for about £75m of sales.

Shareholders in JD Sports reacted badly to the news of the potential purchase, with the sports retailer seeing a sharp fall in its share price last week.

That rebounded on Monday off the back of weekend reports claiming that it was reconsidering its move.

But JD Sports was widely seen as the last chance to save the beleaguered British chain.

If a buyer is not found for Debenhams, the firm could go into liquidation, or face being wound down. During that process, buyers would be sought for its shops and the business’s other assets, like stock.

Hilco Capital, a firm that specialises in winding up struggling retailers, was appointed by Debenhams in August to draw up contingency plans.

Debenhams said at the time that it was “trading strongly”, despite having issued a string of profit warnings even before the pandemic hit.

In recent years several big High Street names have struggled including Thomas Cook, Mothercare and Bonmarche as retailers try to adapt to the rise of online shopping and changing consumer habits.

JD Sports and Debenhams declined to comment.