Debenhams is to shrink about a third of its remaining department stores in a final attempt to survive online competition.
In addition to the closure of more than 50 shops agreed with lenders and landlords in April, which will leave the chain with 100 branches, Debenhams needs to reduce the size of up to 30 more sites as part of the first stage of its recovery plan, according to Terry Duddy, its chairman.
Talks have begun with some landlords, Mr Duddy, told The Mail on Sunday, and some may convert the space for other uses, such as cinemas. The ideal size for a shop would depend on the size of a town but is about 100,000 sq ft, half the size of Debenhams’ most significant stores which can exceed 200,000 sq ft, he said.
“Of the 100 stores, we will be having conversations about what would be the right size for that location, so in some cases we need to be on three floors rather than five,” he added.
Debenhams has 165 shops and 25,000 staff. It was taken private by a consortium including CVC Capital Partners and TPG in 2003 and was relisted on the stock market in 2006. The chain has struggled for more than a decade under onerous leases and debts that have reached £1.1 billion and have left it without the resources to cope with the crisis on the high street. A fifth of retail has migrated online, but business rates and rent bills have not been reduced.
Mr Duddy was installed as interim chairman of Debenhams after a boardroom coup in which Sir Ian Cheshire was ousted by Mike Ashley at a shareholder meeting. Mr Ashley’s Sports Direct held a 29.7 per cent stake in the chain and took a hit of at least £150 million on its shares when Debenhams was sold to a consortium of hedge funds in a prepack administration in April.