Debenhams shares plunge 17% amid reports of store closure plans

Oldham shoppers and staff at the Spindles Shopping Centre will have been concerned to learn that shares in Debenhams plunged 17% after the troubled retailer called in advisers as it considers plans that could lead to the closure of stores.

It has been reported that Debenhams - Spindles' flagship store - is considering a list of options that include a company voluntary agreement (CVA), a controversial way to reduce debts and close stores.

Other options the firm could be looking at include renegotiating leases on stores that are up for renewal, selling off its Danish arm Magasin du Nord and giving up space in some of its large stores.

The company has brought in KPMG to help draw up the turnaround plans, according to The Sunday Telegraph.

In a statement, Debenhams said: "Like all companies, Debenhams frequently works with different advisors on various projects in the normal course of business."

CVAs have been used by a number of retailers, including New Look, Carpetright and Mothercare, to seek creditors' permission to close stores and slash rent bills.

The use of CVAs is unpopular among landlords, who have seen rents slashed by up to 90%.

In June, the company issued its third profit warning, admitting sales were falling short of already lowered expectations amid the crisis facing the high street.

At the time, Debenhams said it had accelerated its cost-cutting plans so further efficiencies could be identified in future.

Debenhams last month said it would cut up to 90 staff at its fashion and home departments as part of a major cost-cutting drive.

Chief executive Sergio Bucher, who is leading the shake-up, slashed 320 store management roles in February.

To compound matters, Debenhams is also the subject of takeover talk, with speculation building that Mike Ashley is set to merge it with his newly acquired House of Fraser.

Mr Ashley owns just under 30% of Debenhams, close to the threshold at which he must launch an official takeover bid.

Strolling through The Spindles Shopping Centre this morning, the Chronicle noticed at least half a dozen units either 'to let' or empty at present.

Oldham West and Royton MP Jim McMahon Tweeted his reaction to the news of Debenhams' share price plunge, saying: "Debenhams is one of the few remaining ‘anchor’ stores in many towns and cities following the collapse of BHS and M&S closures.

"The government need to wake up to the now critical condition of our high streets and rebalance business rates with growing online sales."