Kirkcaldy High Street has been dealt another hammer blow after Debenhams confirmed that the town’s store is one of 22 nationwide to close.
The troubled retailer has announced a Company Voluntary Arrangement (CVA) which will see the affected shops continue trading until early 2020 but put 1,200 jobs at risk across the department store chain.
Other Courier country Debenhams stores in Dunfermline, Dundee and Perth have been given a reprieve for the time being, with Kirkcaldy the only Scottish outlet on the 22-strong hitlist.
However, further closures could still be announced following discussions with landlords, while rent reductions will be sought on many of the remaining branches.
The news will be particularly devastating for Kirkcaldy, which is still reeling from the closure of its Marks and Spencer High Street store earlier this year and is now set to see another sizeable central unit vacated within months.
Lesley Laird, Labour MP for Kirkcaldy and Cowdenbeath, said: “This announcement is hugely disappointing but not altogether unexpected.
“After the loss of Marks and Spencer it was anticipated Kirkcaldy High Street’s problems would get worse before they got better and the closure of Debenhams was really a question of when, not if.
“My thoughts are with the staff at this time and I’ll be contacting Debenhams to see what measures are being put in place to help them find alternative employment.
“Retail habits have fundamentally changed, with large companies on the high street suffering the negative effects most. And, while all high streets across the country face similar challenges, Kirkcaldy’s store closures have come at us so hard and fast, the losses feels more acute here.
“Kirkcaldy High Street requires radical transformation in order to bring back much-needed footfall and a variety of options must be considered, not just retail.
“Fife has secured £4.3m from the Scottish Government’s £50m town centre fund and some of that money will, of course, go to Kirkcaldy but it won’t be enough to secure transformative change.
“Meanwhile, I continue to talk to all key stakeholders to ensure all future development options are being looked at but it requires a co-ordinated approach and this must show some urgency.”
Kirkcaldy SNP MSP David Torrance said he too was “extremely disappointed”.
“It’s disappointing that the Kirkcaldy store is the only Debenhams to close in the whole of Scotland but unfortunately the financial performance was such that it is not entirely unexpected,” he said.
“It’s another bitter blow to the High Street and will only help to reduce footfall.
“We’ve now lost BHS, Marks and Spencer and Debenhams all in a small area and they were all prominent, but we just have to get on with it and try to improve the town centre.”
Garry Clark, development manager for the Federation of Small Businesses (FSB) in Fife, described the announcement as “bad news” given the cumulative effect of other closures.
“The challenge facing Kirkcaldy High Street is growing and it is imperative that urgent steps are taken to enable diversification,” he said.
“Our High Streets can no longer rely only on retail and we must embrace opportunities for people to live, work and socialise there.
“Fife has recently been allocated over £4.3 million from the Scottish Government’s new Town Centres Fund – the highest such allocation in Scotland.
“This investment must be focused where it can make a significant difference to a defined area, encouraging non-retailers and employers into town centres.
“It should not be rushed, though, and Fife Council should take its time to ensure that it gets this opportunity for meaningful intervention right.”
Terry Duddy, executive chairman of Debenhams, said: “The issues facing the UK high street are very well known.
“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.”
The retailer announced that it would pursue a restructuring last year, but the path for the process has now been cleared after control of the company was passed to its lenders.
Debenhams went into a pre-pack administration earlier this month, wiping out the stakes of all shareholders including Sports Direct’s Mike Ashley.
Creditors including landlords will have the opportunity to vote on the CVA in a process overseen by advisers at KPMG.
Jim Tucker, a senior restructuring partner at KPMG, said: “Today’s announcement marks the next phase of Debenhams’ financial and operational restructuring strategy, following the comprehensive funding package announced at the end of March.
“If approved, and with the support of lenders and landlords, the CVAs will allow the business the flexibility to implement its turnaround strategy with a store estate that reflects the current UK retail environment.”
Debenhams also released a financial update for the 26 weeks to March 2, showing that sales at its UK stores declined by 7.4% during the period due to weaker footfall.
Underlying earnings declined by 36.6% to £65.9 million.
The stores expected to close in 2020 are: Altrincham, Ashford, Birmingham Fort, Canterbury, Chatham, Eastbourne, Folkestone, Great Yarmouth, Guildford, Kirkcaldy, Orpington, Slough, Southport, Southsea, Staines, Stockton, Walton, Wandsworth, Welwyn Garden City, Wimbledon, Witney, Wolverhampton.
