Debenhams’ sole Australian store is set to close after Greenlit Brands subsidiary, PSEA Dept Store confirmed its Debenhams Australia franchise terminated.
Both franchise and brand agreements to operate the Melbourne outlet will be terminated putting an end to the embattled UK retailer’s Australian venture.
The announcement comes roughly three months after shareholders voted for a Company Voluntary Arrangement (CVA).
The arrangement put the struggling British department store chain into the hands of its lenders. The result of which saw CEO Sergio Bucher resign and the business enter voluntary administration.
Debenhams Australia franchise terminated
In April, Debenhams announced plans to close 22 stores in the UK, a move it said would help it to save millions of pounds a year.
At the time, it was unclear what the administration process meant for the future of Debenhams in Australia. The arm entered the local market in 2016 under a franchise agreement between the UK business and Pepkor South East Asia (now Greenlit Brands).
Greenlit Brands, which also owns Freedom, Fantastic Furniture, Snooze, Best & Less, Harris Scarfe, Plush and OMF, said it was carefully monitoring the situation. Now, it seems the company has reached a decision.
“Due to change of control that has occurred at Debenhams UK, we believe that it is appropriate for us to start an orderly and managed process to cease this agreement,” Greenlit Brands CEO Michael Ford said in a statement provided to Inside Franchise Business sibling publication, Inside Retail on Wednesday.
“Our immediate focus is to support the Debenhams team members in Australia through this process and where possible, look at redeployment opportunities in the Greenlit Brands group once the business ceases to operate.”
It is believed that the store, which is located in the St Collins Lane precinct in Melbourne, will close in early 2020.
Previous Debenhams Australia plans
It’s a very different turn of events from the vision Greenlit Brands laid out when it first announced it was bringing the venerable department store chain to Australia in 2016.
The company, then operating as Pepkor South East Asia, said the Melbourne store would be the first of an eventual 10 Debenhams locations in Australia. The stores were meant to take advantage of the seasons to bring only the best-selling items from the retailer’s enormous range in the UK to the smaller format stores in Australia.
Even at the time, however, some questioned the move, given the general trend in department store sales worldwide.
“The last thing Australia needs is another department store and the cut-down model has not worked for most European department stores around the world,” retail analyst and advisor, Peter James Ryan said when the plan was first announced.
Debenhams Australia moving forward
Indeed, none of the other nine planned stores ever eventuated. And the sole Debenhams in Australia – the 36000sqm, two-storey location in Melbourne – will soon close its doors.
“This process will be undertaken carefully and sensitively while maintaining business as usual and continuing to serve our loyal Debenhams customers in Australia,” Ford said.