Debenhams placed into administration

DHL Supply Chain is in talks with long-term customer Debenhams after the retailer proposed a company voluntary arrangement (CVA).

The two businesses have worked together for more than 20 years, with DHL winning a five-year, multi-million pound warehousing and distribution renewal in September 2016.

However, the troubled department store chain is seeking a CVA as part of a turnaround plan. It comes after its lenders took control of the business last month via a pre-pack administration.

Terry Duddy, executive chairman of Debenhams, said: "Debenhams has a clear strategy and a bright future, but in order for the business to prosper, we need to restructure the group's store portfolio and its balance sheet, which are not appropriate for today's much changed retail environment.

“Our priority is to save as many stores and as many jobs as we can, while making the business fit for the future."

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Debenhams’ CVA proposal, if accepted, will see the closure of up 22 of the firm’s 166 stores by the end of 2020. More closures could follow dependent on future trading, lease discussions with landlords and business rate talks with local councils.

The firm’s warehousing network will also come under scrutiny.

Debenhams’ had already announced in April 2017 that it would close its DHL-run Lodge Farm Northampton DC during 2019 and stated that its remaining warehousing facilities “could be consolidated further as a result of this process”.

DHL confirmed to that Lodge Farm would remain open until the end of this month, during which time the 3PL will continue to work with affected colleagues to help them find alternative employment.

It also manages sites for Debenhams at Peterborough and Sherburn. However, the full extent of the impact on DHL’s operation with Debenhams is yet unknown.

A spokeswoman for DHL Supply Chain said: “We are actively talking to the customer to understand the impact of their announcement.”

Debenhams’ CVA proposal will be voted on at a creditors’ meeting on 9 May.

Picture: PA Images