Troubled British department store chain Debenhams is asking for relief from landlords for five months of rent as it anticipates trouble from the ongoing coronavirus scare, according to a report by the Financial Times.
The chain went through two insolvency events in 2019, and it expects the virus to adversely affect trading. The group also recently asked for a drop in business rates and rent in relation to its balance sheet restructuring, which could potentially involve a process that would turn 100 million pounds ($122.4 million) of debt into equity.
Another company, Carluccio’s, a casual dining chain, made a similar request. The chain went through its own insolvency process in 2018 to close stores that were underperforming in an attempt to be more profitable.
Debenhams said it could write off “significantly more” debt if landlords lowered its bills, which would give it a better chance at recovery. The company employs about 20,000 people in the country.
“All retailers are facing unprecedented pressures from the current situation, and we are managing our operations to minimize risks to colleagues and customers whilst — as far as possible — trading as normal,” a spokesperson said. “We have access to funding, supportive investors and an experienced leadership team that will take appropriate action to manage through this period.”
Debenhams locations are concentrated on main streets and in the middle of shopping centers, which are places that have been affected the most in terms of traffic and frequency of visits during the scare. Some analysts said foot traffic on main streets is down 31 percent when compared to the same time period last year.
Debenhams is responsible for about 250 million pounds ($306 million) a year in rent and bills. Revenues for the year through August 2018 were 1.8 billion pounds ($2.2 billion).
The company closed about 22 stores at the beginning of the year, and it could potentially close 28 more early next.