Debenhams closing, Arcadia in administration: The unfavourable pandemic economy has led Debenhams to close whilst Arcadia is in administration.
Debenhams had also been in administration since April until it’s last bidder JD Sports withdrew.
This withdrawal ended the retailers chance of making a comeback which will leave thousands of employees jobless.
12 000 employees will lose their position with Debenhams after the company ceases trading.
Arcadia is now set to follow as it enters administration, meaning an independent team of experts will try to save the company.
Arcadia owns Topshop, Burtons, Miss Selfridge and Dorothy Perkins collectively employing 13 000 people.
With so many jobs on the line it is vital that this team succeed where Arcadia failed.
Ian Grabiner, CEO of Arcadia blames Covid for the company’s money troubles and pledged himself to saving as many jobs as possible:
“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.”
Debenhams closing, Arcadia in administration: Why are retailers failing?
Debenhams has been struggling for several years according to former chairman Sir Ian Cheshire.
He claimed that the company was crippled by having too many stores that it couldn’t afford to run.
He pointed out that a website is far cheaper and easier to change compared to restocking and changing the layout of a store.
Debenhams began as a single small shop in 1778 and grew into a vast empire outlasting recessions, depressions and even world wars.
However, despite this impressive business record it could not hold out against the coronavirus pandemic.
Administrators Philip Watkins and Philip Armstrong, partners at FRP Advisory, concluded they should start shutting down Debenhams in the UK whilst considering options to sell off parts of the business.
Richard Lim, chief executive of Retail Economics, an independent economics research consultancy, said:
“We can not overstate the significance of this collapse, given the vast property portfolio, number of jobs impacted and the reverberations felt across the industry.
“The reality is that Debenhams has been outmanoeuvred by more nimble competitors, failed to embrace change and was left with a tiring proposition.
“The impact of the pandemic has accelerated its demise, but underlying issues within the business were the root cause.”
Hopefully under new administration Arcadia can adapt to the challenges presented by coronavirus and keep it’s stores open.