Debenhams shares plunge as it mulls its future options
Sharp decline in the retailer's shares could be acquisition opportunity for billionaire Mike Ashley's Sports Direct
Troubled department store chain Debenhams has confirmed it's continuing to assess its future options, with fears of a possible Company Voluntary Arrangement with creditors in the UK sending its shares plunging as much as 17pc yesterday.
The chain's Irish business exited examinership in 2016.
It had entered the protective process after arguing that high rents at its Irish outlets were making its business here unsustainable. Debenhams has 11 outlets in Ireland, most of which it acquired from Roches Stores in 2006.
It had sales of €170m in its 2017 financial year in Ireland, but made a €246,000 loss here.
A spokeswoman for Debenhams did not respond to queries on whether the Irish operations were part of the current review of the group's future options.
The examinership process in Ireland prompted UK billionaire Mike Ashley to make an unsuccessful bid for Debenhams' Irish business. Mr Ashley heads Sports Direct, which owns a 27.6pc stake in the wider Debenhams group.
He was rumoured during the summer to be plotting a takeover of Debenhams as he sealed the acquisition of House of Fraser, in which he also had a holding.
Sports Direct wrote £85m (€95.4m) off the value of its Debenhams stake in July as the department store chain continued to struggle.
Sports Direct also owns the Heatons department store chain in Ireland, which it acquired for €48m in 2016.
The sharp decline in Debenhams' share price, coupled with the drafting in of KPMG to assess its future options, could be a window of opportunity for Sports Direct to make a move on the chain.
Debenhams said in a trading statement yesterday that it expects pre-exceptional, pre-tax profit of about £33m (€37m) in the financial year just ended. That's within the expected range.
It said that it continues to strengthen its financial position in order to give it "comfortable liquidity" through its peak borrowing period, "ensuring maximum flexibility amidst volatile market trading conditions".
"The early weeks of the new season have shown more positive trends and any sustained upturn would result in a rebound in our profit performance," it said.
Debenhams' chief executive is Sergio Buchcer, who last year unveiled a strategic review aimed at returning the company to growth.
"The market environment remains challenging and underlying trends deteriorated through the summer months," he said yesterday.
"Nevertheless the product and format improvements we have tested are gaining traction."