Department Stores

Debenhams releases statement amid closure rumours to calm investors

Debenhams has released an official statement in response to rumours it was preparing to shutter stores and enter a CVA following the reported appointment of advisory firm KPMG.

The department store said “following recent media speculation” it would issue its preliminary results on 25 October 2018 saying it expected a “pre-exceptional pre-tax profit” for the full financial year of “around £33m” within the current market range of £31m to £36.5m. It also said it expected an EBITDA of around £157m.

The statement said the financial results would be consistent with its focus on managing cost and cash generation and expected its year-end net debt to be approximately £320m “in line with guidance and retaining significant headroom on [its] £520m medium term facilities”.

Debenhams said it “continued to strengthen” its financial position and added that the early weeks of the new season had “shown more positive trends” and any sustained upturn would result in a rebound in its profit performance.

The Sunday Telegraph reported on 9 September that the company had appointed KPMG to help it draw up a turnaround plan. It was speculated that this would result in closures and job cuts.

The statement made no reference to a possible CVA nor did it confirm if KPMG had been assigned to help restructure the company.

Sergio Bucher, CEO, said: “The market environment remains challenging and underlying trends deteriorated through the summer months. Nevertheless the product and format improvements we have tested are gaining traction and we are ready to scale up some of our strategic activity ahead of peak.

“Having put in place a leaner operational structure and strong leadership team, and taken action to strengthen our financial position, we are well equipped to navigate these market conditions and take advantage of any trading opportunities that emerge.”

Sir Ian Cheshire, chairman, added: “As we stated in June, the board continues to work with its advisers on longer term options, which include strengthening our balance sheet and reviewing non-core assets. This activity is in order to maximise value for shareholders and protect other stakeholders, including our employees.”

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