The beginning of February has finally seen some good news following concerns that both Debenhams and HMV might collapse. Store closures are plaguing high streets across the country, as business after business goes bust. While they aren’t out of the woods just yet, these two brands seem to at least be edging towards more stable ground. Following a cash injection of £40 million, Debenhams has some breathing room. Plus, a Canadian company is taking over HMV with plans to make it profitable.
Debenhams Secures £40 Million to Battle Debt
Following three profit warnings in 2018, Debenhams is in dire straits. Sales were slumping, and a massive rent payment was looming in March 2019. In advance of this, the department store has been looking into the option of a CVA. Many other high street stores have had to resort to a Company Voluntary Arrangement to save their business from going bankrupt. Debenhams was running out of room with its £520 million in loans, desperately in need of rapid change. They were already planning to close stores, but a CVA would speed up this process. It would also allow them to re-negotiate rent with property landlords. Time is ticking, so this extra funding is a huge relief for Debenhams. It extends their borrowing facilities for another year, giving them more time to sort things out. To be clear, Debenhams is still in trouble – but now they have a much better shot at getting out of it. However, doing so will involve some sacrifice. Of its 165 stores and 25,000 employees, Debenhams is going to have to enforce some closures and redundancies. They are planning to close up to 50 stores in the next 3 – 5 years, putting around 4,000 jobs at risk. However, their current situation makes it likely that as many as 20 stores could be closing in 2019 alone. Debenhams is yet to publicize a list of the stores that they intend to close. After the announcement of the cash injection, the shareholder market value of Debenham rose by up to 30%. People seem to have some faith that Debenhams can recover from this. The brand is also making a deal with specialists Li & Fung to improve their goods, so they are taking necessary steps to turn the business around.
Hope for HMV Amongst Store Shutdowns
HMV going into administration might give you a sense of deja vu. Yes, you have heard it before – six years ago. HMV just about survived those previous struggles, but several years later the British brand is back in the red. Physical sales of music, video, and games have been dropping year on year as consumers change their habits around the convenience of online shopping. This was bad news for the retailer, but it doesn’t mean that the future of HMV isn’t brighter than it has been for a while. Business-owner Doug Putman is shouldering the mission of saving HMV from the same fate as several of its contemporaries. The owner of the Canadian company Sunrise Records acquired HMV and immediately began making plans to keep as many of the stores open as possible. Out of 127 stores, 27 had been due to close. So far 3 of them have since re-opened, in Bluewater, Bath, and Glasgow. At the moment, the rest are still slated for closure, resulting in the losses of 455 jobs. That said, there is hope that Putnam can stop this from happening. He ambitiously aims to make HMV profitable again within the year. He plans to do this by investing in the HMV website and changing the HMV stores. There will be a focus on vinyl in stores to meet a contemporary demand, and stores will be able to stock their shelves according to local demand. They will also be making sure that the latest releases are always in stock. HMV’s online store is unavailable while it undergoes development. When it re-opens, it will hopefully have new features linking it to physical stores. The ability to check store stock would encourage sales. Unless there are further changes, though, in the coming weeks two dozen HMV stores will be closing their doors for good. These are the stores that still need to be rescued:
Bristol, Cribbs Causeway
Fopp, Glasgow Byres
Merry Hill, Dudley
Oxford Street, central London
Plymouth, Drake Circus
Westfield Shepherds Bush