Debenhams set to close all stores with possible loss of 12,000 jobs

Debenhams is set to wind down the business and close all 124 stores with the potential loss of 12,000 jobs after JD Sports ended discussions over a rescue deal for the struggling department store chain.

Administrators to Debenhams, which has been seeking a buyer since the summer, said the sale process had “not resulted in a deliverable proposal”.

They will continue to seek a buyer while stores will remain open to sell off remaining stock, a process managed by liquidation experts at Hilco. If no buyer is found once that stock is sold, the stores will close.

Closures are expected to start early in the new year with the likelihood that Debenhams will disappear from the high street after more than 200 years.

The department store traces its roots back to 1778 when William Clark established a drapers store on Wigmore Street in the West End of London, selling fabrics, bonnets, gloves and parasols. Its current name stems from 1813 when William Debenham invested in the company, which became Clark & Debenham.

The collapse of the department store, which went into administration in April for the second time in a year, comes in the same week as Sir Philip Green’s Arcadia Group, the owner of Topshop, Miss Selfridge and Dorothy Perkins, called in administrators. The difficulties at the two retail groups put 25,000 more high street jobs at risk in a week, a vast majority of which are held by women.

Richard Lim, the chief executive of analysis firm Retail Economics, said: “We cannot overstate the significance of this collapse given the vast property portfolio, number of jobs impacted and the reverberations felt across the industry.

“The reality is that Debenhams has been outmanoeuvred by more nimble competitors, failed to embrace change and was left with a tiring proposition. The impact of the pandemic has accelerated its demise but underlying issues within the business were the root cause.”

Related: JD Sports pulls out of Debenhams rescue talks after Arcadia's collapse – business live

Geoff Rowley of FRP Advisory, the joint administrator to Debenhams, said: “All reasonable steps were taken to complete a transaction that would secure the future of Debenhams. However, the economic landscape is extremely challenging and, coupled with the uncertainty facing the UK retail industry, a viable deal could not be reached.

“The decision to move forward with a closure programme has been carefully assessed and, while we remain hopeful that alternative proposals for the business may yet be received, we deeply regret that circumstances force us to commence this course of action.”

Talks with JD ended after Debenhams’ major supplier Arcadia collapsed into administration on Monday, and it is understood that the uncertain future of the group played a part in the decision.

Uncertainty about conditions on the high street, including the potential for future lockdowns and the reinstatement of business rates, as well as negative reaction from shareholders to news of a potential deal also contributed to JD’s withdrawal from rescue talks.

JD confirmed the decision on Tuesday morning in a statement that said “discussions with the administrators of Debenhams regarding a potential acquisition of the UK business have now been terminated.”.

With the exit of JD Sports, the only remaining suitor likely to take on a significant number of stores is Mike Ashley’s Frasers Group.

Ashley has made no secret of his interest in the ailing department store despite seeing a £150m stake he built up in the then listed company wiped out last year in a debt restructuring deal with the department store’s lenders.

However, Ashley’s offers for the business have so far not exceeded half of the £300m price tag hoped for by its owners.

Big chains including Next, John Lewis and Marks & Spencer are expected to take a look at prime Debenhams sites, but many could be broken up into smaller stores or redeveloped for other uses, resulting in significant changes on high streets around the country.