the times | Wednesday December 2 2020 1GM 37
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Nov 3 11 19 27 Nov 2 10 18 27 Nov 3 11 19 27 Nov 3 11 19 27 Nov 3 11 19 27 Nov 3 11 19 2732,00030,00028,00026,000Ashley Armstrong Retail Editor
High streets have been plunged into
further misery after Debenhams said
that it would start winding down all of
its stores.
The retailer announced its decision
yesterday after JD Sports pulled out of
rescue talks.
About 25,000 retail jobs have been
put in jeopardy in the past two days.
The collapse of the department stores
chain came within 24 hours of Sir Philip
Green’s Arcadia empire filing for
administration on Monday, putting
13,000 jobs at risk. More than 170,000
retail jobs have been lost this year,
according to the Centre for Retail
Research.
Debenhams is working with liquida-
tors at Hilco on a fire sale of all its stock
before the shops close in the new year.
The demise of two of Britain’s best-
known retailers led to renewed calls for
the government to overhaul the busi-
ness rates system so that the high street
can survive the shift to online shopping
accelerated by the pandemic.
However, industry sources said that
the failures of Arcadia and Debenhams
should be attributed in part to a lack of
investment from their former owners,
which left them unable to adapt to
changing shopping habits.
Debenhams, which has been in
administration since April, had been
trying to find a rescuer and was work-
ing on a restructuring plan to reduce
rents and the size of its store estate.
JD Sports had been in exclusive
negotiations to rescue the 242-year-old
chain, but it is understood that inves-
Investment banks advised their clients
to buy British shares yesterday as world
stock markets rallied again.
Fresh from its best month since 1989,
the FTSE 100 climbed by 1.9 per cent, or
118.54 points, to 6,384.73 for its best day
in three weeks. The domestically
focused FTSE 250 gained 2.6 per cent,
or 508.49 points, to close at 19,844.81.
Footsie on the march after big US banks issue call to buy British
James Dean US Business Editor
Tom Howard Markets Reporter
The rally has been fuelled by optimism
that Covid-19 vaccines will get the
economy back on track by the end of
spring next year. Investor sentiment
was boosted further by strong factory
data from China.
The pound rose by 0.7 per cent to
close above $1.34 for the first time since
June 2018 as hopes grew that Britain
will seal a trade deal with the European
Union. Ian Tew, at Barclays, said: “Ar-
guably the pound has been underval-ued since 2016. With a Brexit resolution
and a vaccine in place, the UK becomes
an investable place once again.”
Goldman Sachs advised its clients to
invest in British shares, predicting that
a last-minute “skinny” free trade deal
with the European Union would be
announced soon. The investment bank
also advised clients to “go long” on the
pound, predicting that it could rise to
$1.44 next year as the UK economy re-
bounds faster than previously forecast.Citigroup, Morgan Stanley and UBS
have advised clients to buy British.
Caroline Simmons, UK chief invest-
ment officer at UBS Global Wealth
Management, said that Britain was “a
most preferred market” and set a June
price target for the FTSE 100 of 6,800.
Wall Street hit two new records after
a bipartisan group of US senators put
forward a $908 billion spending stimu-
lus. The S&P 500 rose by 1.1 per cent to
3,662.45, taking it up 13.4 per cent in theyear to date, and the Nasdaq rose 1.3 per
cent to 12,355.11. It is up 37.7 per cent
since January. The Dow Jones industri-
al average rose 0.6 per cent to 29,823.92,
lifting it by 4.5 per cent over the year.
The pan-European Stoxx 600 index
climbed 0.7 per cent. France’s CAC 40
rose by 1.1 per cent and Germany’s Dax
gained 0.7 per cent. Brent crude, the
global oil price benchmark, fell 0.9 per
cent, or 42 cents, to $47.46. Gold rallied
by 2 per cent, or $36.20, to $1,817.10.Department stores to close after rescue talks fail
Debenhams
to disappear
in new year
tors had raised concerns about the
sportswear retailer making a dramatic
departure from its usual strategy.
It is understood that while the board
of JD Sports was convinced that it could
improve Debenhams by adopting a
similar approach to its turnaround of
Finish Line, the American retailer,
fixing the department stores would
have required significant management
attention at a time when the retail
market is fiercely competitive. Another
concern was that Arcadia is the biggest
concession within Debenhams, ac-
counting for 5 per cent of sales, and JD
Sports could not be certain who might
eventually own its fashion brands.
One source said that the fall of
Arcadia had been “the straw that broke
the camel’s back”. It is thought unlikely
that JD Sports will be interested in
buying any of Arcadia’s brands.
JD Sports shares rose by 32¾p, or
4.2 per cent, to 809p last night, with
investors relieved that the group would
no longer be distracted by Debenhams.
Shares in Marks & Spencer rose by 7p,
or 5.6 per cent, to 132¾p in response to
the loss of a competitor, as did those of
Next, another high street stalwart,
which rose 194p, or 3 per cent, to £67.46.
Mike Ashley’s Frasers Group could
attempt a renewed bid for Debenhams,
although it is thought that it would be
more interested in buying some of the
best-performing stores. Competition
could come from Next, M&S and John
Lewis, which also may want to cherry-
pick outlets that will improve their
estates. Shares in Frasers Group rose by
4.3 per cent, or 18¼p, to 440p.
‘Ghost town’ fear, pages 38-39ROYAL MAILPost-haste The price of a first-class stamp will rise by 9p to 85p in the new year. The 12 per cent increase, which still keeps
the price below commemorative stamps issued in 2016, will help Royal Mail to claw back £180 million of half-year lossesCaffè Nero landlords threaten revolt
Dominic Walsh, Louisa Clarence-Smith
Caffè Nero could face a legal challenge
despite winning backing from creditors
to pursue a company voluntary ar-
rangement.
The coffee chain’s plan was thrown
into confusion by an eleventh-hour bid
from EG Group, controlled by the
billionaire Issa brothers. The approach
was rebuffed, although it is understood
that Mohsin, 49, and Zuber, 48, who are
buying Asda from Walmart, remain
interested. Under EG’s bid, landlords
would have been paid in full for rent
arrears during the pandemic, compared
with 30p in the pound under the CVA.
Under insolvency law, creditors can
challenge the outcome of such a
restructuring plan within 28 days.
Lawyers for EG Group have written to
Caffè Nero to highlight the strong
possibility of a landlord revolt.
Melanie Leech, 58, chief executive ofthe British Property Federation, said:
“It can’t be right that a CVA is being
used in this way, forcing property
owners, many of them small independ-
ents reliant on store income for their
pensions, to absorb such huge losses,
when Caffè Nero has received signifi-
cant support from government over the
past several months and failed to en-
gage adequately with property owners
prior to its CVA launch.”
Terje Gilje, 59, a landlord owed
£208,000 for a branch in Kensington,
west London, said that he would join a
legal challenge to the CVA. He said: “I
think it’s outrageous that they didn’t
delay. I suspect that you will find a
group of landlords will gain momen-
tum and will go ahead and challenge it.”
A source close to the CVA denied
that there was poor landlord engage-
ment. The group, which is using the
insolvency process to switch to turn-
over-related rent, said that more than90 per cent of creditors had voted in
favour of the proposal yesterday, while
it had the support of more than 80 per
cent of landlords.
Caffè Nero has more than 5,000 staff
in 800 branches in the UK. According
to the CVA documents, landlords are
owed arrears of £110.3 million, All Souls
College, Oxford, is owed £321,000 and
Heathrow is owed £2.7 million.
Caffè Nero said: “The approval of this
CVA by the company’s creditors safe-
guards the immediate future of the
business and provides a sustainable
platform from which the company can
navigate the challenges ahead and
rebuild sales momentum.”
EG said that it regretted that “Caffè
Nero’s creditors did not have an
opportunity to consider our proposal
fully, as we believe it would have
delivered a stronger outcome for all
stakeholders, including employees and
landlords”.