“We’re not insolvent.”
Those were the words of Debenhams chair Sir Ian Cheshire, who spoke to Today on BBC Radio 4 following Monday’s “circus” surrounding the department store chain’s future. The clarification came after the UK-headquartered firm issued a September 10 trading update in response to multiple media reports citing possible turnaround plans.
“The only analogy I can have to it is like having a bunch of nosy neighbours watching your house,” Cheshire told the news and current affairs programme. “Somebody sees somebody in a suit going into a room. The second person concludes it’s a doctor, the third person concludes it’s an undertaker, and by the time it gets to the end of the day you’ve got cause of death and everyone’s looking forward to the funeral. And it was an extraordinary set of no new news.”
The chair clarified: “We have always said we will look at every option in the long term, but the implication from the newspapers was that we are actively driving a CVA (company voluntary arrangement) with KPMG and it is simply not true.”
Debenhams, whose shares fell more than 10% on Monday, will be releasing its preliminary results on October 25. According to its trading statement, the high street retailer expects to report pre-exceptional pre-tax profit for FY2018 of around £33 million and roughly £157 million in earnings before interest, tax, depreciation, and amortisation (EBITDA).
Over the weekend it was reported that credit insurer Euler Hermes had further reduced coverage for Debenhams suppliers.
“Against this background, we are no longer able to retain existing levels of cover,” The Sunday Times quoted the Allianz-owned provider as telling clients in a letter, with “background” referring to Debenhams’ profit warning in June – already the third this year – and a Moody’s downgrade in August.