Having sent its store & online concession suppliers a missive last week saying that it would not be paying them for merchandise it had already sold, the very heavy-handed Debenhams management team is very quickly running out of support.
The notification to suppliers from CEO Stefaan Vansteenkiste, which we had sight of, said:
“I just wanted to advise you that, consistent with our other suppliers outstanding, we are deferring all historic concession balances for 30 days. I do regret this, but it is a necessary measure to mitigate the government mandated shutdown of our store estate and consequential loss of our trading income, save for online trading which I say a bit more on below.
These circumstances are unprecedented. As you can imagine, we are having constructive discussions with all of our stakeholders to bridge through this current shutdown period. We would hugely value your cooperation as a valued trading partner.
With regard to online, we have, unlike some of our competitors, managed to maintain our online channel and are conscious that customers are still ordering concession products through that channel. We have no way of knowing whether the government will impose further measures which may have the consequence of shutting down the online channel. Nevertheless, our intention is to maintain this channel through the current crisis, unless circumstances make that impossible.
I wanted to give you the reassurance that, notwithstanding the extended terms we have had to impose on historic balances, we intend to account on a weekly basis for amounts generated from the online concession channel, so long as that channel remains open.”
We understand that a number of affected suppliers are joining together to mount what has been described as a criminal lawsuit, on the grounds that Debenhams has effectively stolen their stock and revenue, using the proceeds to shore up what is an effectively defunct enterprise.
Debenhams is no stranger to administration having already used the process to shed stores and staff. Now it has placed most of its staff on furlough to grasp the government subsidy, whilst preparing, it is said, a further administration which will be the final nail in the coffin for many of its suppliers.
Debenhams is currently owned by a group of hedge funds and banks which could easily invest the required funds to enable the business to meet its liabilities however nothing in relation to this has been shared. As most of its online concession suppliers had been direct despatching orders for Debenhams, some have already insisted that their products be de-listed, as any trust and goodwill has evaporated.
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