Home Business Debenhams shares suffer worst ever hit amid supplier fears

Debenhams shares suffer worst ever hit amid supplier fears

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Shares in crisis-hit Debenhams have dived by more than a fifth amid reports of difficulties with suppliers ahead of Christmas.

The stock lost ground at pace towards the end of Wednesday, with trading closing 21.4% lower – its worst ever daily decline.

The department store chain has, like rivals, been grappling financial pain from higher costs and a sharp slowdown in high street spending.

It used its annual results last month, which recorded the biggest financial loss in Debenhams’ 240-year history, to announce plans to close up to 50 stores to help fund a turnaround plan.

Its share price decline followed news that one of its main rivals House of Fraser – which was rescued from collapse by Mile Ashley’s Sports Direct in the summer – is to shut four stores because of a failure to agree new terms with commercial property landlord Intu.

Mr Ashley has a stake of almost 30% in Debenhams.

The fashion industry publication Drapers reported that a number of high street suppliers had stopped working with Debenhams.

It cited cuts to its credit insurance and fears of missed payments.

Stock market analysts said the report was the reason for the chain’s market value coming under renewed pressure.

It is almost 85% down in the year to date, standing at £81.5m.

Debenhams currently has a workforce of 27,000 staff and 165 stores.

The company said: “Many suppliers don’t use credit insurance. Those that have used it historically are well aware of the current situation and work with retailers to manage things accordingly.

“Debenhams is well stocked for Christmas.”

The wider retail sector is hoping for a pick-up in business after a tough 2018 dominated by Brexit caution and weather – the latter issue seeing shoppers staying away during the “Beast from the East” winter cold snap before a joint-record summer helped sales return.

(c) Sky News 2018: Debenhams shares suffer worst ever hit amid supplier fears