KPMG has been called in to advise Debenhams on options for its turnaround plan, which may see the store chain join other high street retailers in opting for a company voluntary arrangement (CVA), according to reports
Debenhams is already engaged in a restructuring of the business designed to cut costs and boost sales. Last month the retailer said it had begun talks with some 200 buyers, merchandisers and other team members across its homewares and fashion divisions regarding potential redundancies as part of its plans.
It has also announced that around 90 jobs are likely to go from its head office, having already announced the loss of 320 store management jobs earlier in the year.
In a statement the company said: ‘Like all companies, Debenhams frequently works with different advisers on various projects in the normal course of business.’ KPMG has made no comment.
Debenhams has issued three profit warnings this year and has indicated its cost cutting exercise should save it around £20m annually.
This year has seen a slew of CVAs in the retail and dining out sector, including House of Fraser, New Look, Poundworld, Carpetright, Mothercare, The Original Factory Shop, Jamie’s Italian, Byron Burger, and Prezzo.
CVAs frequently involved restructuring of leasehold agreements on properties and have proved controversial, with landlords claiming high street chains are forcing them to accept rent reductions or push them into insolvency.
Debenham's current auditor, PwC, earned fees of £200,000 for work for the company and consolidated accounts to September 2017. The company first listed on the FTSE in 1928 but recent market shifts and changing tastes saw its shares relegated to the FTSE Small Cap market. Just under 30% of the company's issued share capital is currently owned by Mike Ashley, owner of Sports Direct and House of Fraser.
Report by Pat Sweet