The recent global economic recession brought about by the adverse effects of the COVID-19 pandemic has left many companies unable to cope with the costs of survival, as a 242 year-old chain of retailer stores in the United Kingdom, Debenhams, are about to be closed down after efforts to rescue it proved abortive. This means that at least 12,000 employees in the 124 shops are set to lose their jobs. The department stores have been in their second period of administration in recent years since April 2020, and all efforts to rescue the chain have failed and the company is set to liquidate.
Debenhams, despite making about 6,500 employees redundant since May 2020, could not secure successful bids from investors, and the last bid before the decision to close down, from JD Sports, was eventually withdrawn after the uncertainties being experienced by Arcadia, owners of Topshop, who have just announced going into administration, few hours before Debenhams announced they are closing down.
Arcadia has about 13,000 employees. If they eventually wind up, that will be 25,000 employees losing their jobs in the two companies. Administrators at Debenhams are hoping that deals are made with some companies in parts of the business, otherwise all 12,000 of their employees will be made jobless.
Debenhams, started as a single shop in Central London in 1778. It survived recessions, the Depression, and the two World Wars. She has ultimately succumbed to the effect of the lockdown necessitated by the COVID-19 pandemic; and the advent of sophisticated internet shopping (online retailing).
“All reasonable steps were taken to complete a transaction that would secure the future of Debenhams. However, the economic landscape is extremely challenging and, coupled with the uncertainty facing the UK retail industry, a viable deal could not be reached.” FRP Advisory’s Geoff Rowley, said. FRP Advisory is a joint administrator at Debenhams and a partner at FRP.
The BBC reported that Topshop, the High Street retail giants, have gone into administration and have hired Deloitte to take over administration of the company. They claim that the COVID-19 pandemic has greatly adversely impacted sales across the stores.
Although it said that no redundancy is going to be announced soon, but it is most likely inevitable.
Arcadia runs about 444 stores in the UK, and 22 overseas. It said that it is continuing trading as Deloitte considers options available to the group, and all Black Friday deals will be honoured.
At this instance, 9,294 employees are currently on furlough. Furlough is a leave of absence for a considerable amount of time, from which employees are expected to return at its expiration.
Ian Grabiner, the head of Arcadia, said: “The impact of the Covid-19 pandemic, including the forced closure of our stores for prolonged periods, has severely impacted on trading across all of our brands.
“Throughout this immensely challenging time our priority has been to protect jobs and preserve the financial stability of the group, in the hope that we could ride out the pandemic and come out fighting on the other side.
“Ultimately, however, in the face of the most difficult trading conditions we have ever experienced, the obstacles we encountered were far too severe.”
Observers are hoping that the Deloitte administration finds a lasting solution to the problems faced by Arcadia, and avoid the looming possibility of additional 13,000 jobs lost, and one more prominent retailer group losing the challenge of survival.