Store closures, leasing space to gyms and now flexible-office firms all part of cost-saving plan
In the latest sign of retailers battening down the hatches Debenhams is considering renting space in its flagship London department store to a hot desking firm.
The retailer is in talks to rent floor space to flexible-office provider WeWork, as it looks to scale back its high street presence.
Last year Debenhams chief executive Sergio Bucher announced a shake-up of the 240-store chain that would close 10 shops, downsize others and strike partnerships with outside firms. It has already teamed up with Sweat! to open three gyms in surplus space.
Retailers, including the major supermarkets, have been trying to get rid of excess space by bringing in other brands, cafes or restaurants, but are yet to tap into the market for shared office space. The talks with WeWork, a fast-growing American company, are said to be at an early stage, according to Bloomberg which first reported the discussions.
Debenhams pruned its store management teams last month with 320 jobs going as part of a £10m cost-saving plan launched in the wake of a disappointing Christmas.
Bucher is also facing pressure from its biggest shareholder, Mike Ashley’s Sports Direct, which last week upped its stake to 29.7%, just shy of the level that would trigger a bid for the company.
Separately, it emerged that House of Fraser’s Chinese parent, Sanpower, is set to hand control of the struggling chain to another investor.
In 2014 the conglomerate, controlled by one of China’s richest men, Yuan Yafei, acquired an 89% stake via its department store arm, Nanjing Cenbest. The group had promised to invest in the British chain but extra funding has not been enough to stop the business from struggling. In a stock market announcement on Tuesday, Nanjing Cenbest said it was in talks to sell 51% to Wuji Wenhua, a Chinese leisure group.
“Nanjing Cenbest is in advanced discussions with Wuji Wenhua with a view to Wuji investing in House of Fraser,” it said in a statement. “We believe that Wuji Wenhua can be a strong strategic equity partner as they possess vast experience in the leisure sector and have access to a large network of travellers.”
Like Debenhams, House of Fraser wants to cut the size of stores in an effort to slash its rent bill after a tough Christmas. House of Fraser said the proposed share sale would have no impact on the day-to-day operations, declaring: “It is business as usual.”