UK-Based Multinational Department Store Debenhams Collapses, After 200 Years of Trading

“The traditional private equity model should have no place in retail.”

Shares of UK-based multinational department store Debenhams — with 165 stores in the UK and Ireland and with 58 franchise stores in 19 other countries — were suspended today after the company and its creditors turned down two last ditch rescue offers from discount retail group Sports Direct, which owns close to 30% of Debenhams’ stock. Debenham’s shares have collapsed spectacularly since they were floated on the stock market in 2006 by its then-private equity owners, Texas Pacific Group, CVC, and Merrill Lynch Private Equity:

The latest rejection means that Debenhams, after gracing British high streets for over 200 years, now faces a “pre-pack” administration that will wipe out its shareholders, including Sports Direct which is estimated to have plowed at least £150 million into the firm.

On its corporate website Debenhams stated that while the Group’s holding company has gone into administration, its operating companies “continue to trade as normal” and its commercial stakeholders, including suppliers, are not adversely impacted by the Company’s administration. “We remain focused on protecting as many stores and jobs as possible, consistent with establishing a sustainable store portfolio in line with our previous guidance”

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