Debenhams has put a price tag of up to £250m on its Danish department store chain Magasin du Nord, as it looks to flush out potential buyers.
The struggling department store chain, which has issued three profit warnings this year amid brutal high-street trading conditions, said at the start of the summer that it was considering selling assets to shore up its finances.
Debenhams’ advisers, Lazard, believe the Danish chain could fetch £200m-£250m based on a teaser document being circulated among potential buyers. Debenhams acquired Magasin for just £12m nearly a decade ago.
Magasin, which has six stores including its famous 124-year-old flagship building in Copenhagen city centre, made an underlying profit of £26.6m last year on sales of £326m.
The chief executive of Debenhams, Sergio Bucher, is under pressure to show that he can end the current sales slump, which has seen Debenhams’ share price plummet more than 70% over the past year.
In 2017, he set out plans for an ambitious makeover that would turn its stores into destinations by installing new restaurant brands as well as nail and blow-dry bars. Its dated Designers at Debenhams fashion ranges would also get an overdue update, he said.
But Bucher’s plans have been waylaid by weak consumer spending, coupled with heavy discounting, as its high street rival House of Fraser fights for survival. That has had a knock-on effect on confidence in the sector and it recently emerged that credit insurers including Euler Hermes had reduced cover for Debenhams’ suppliers. A withdrawal or reduction in cover tends to mean that suppliers demand payment upfront, putting increased strain on a retailer’s working capital.
At the time of the most recent profit warning in June, Debenhams said it expected to make annual profits of £35m-£40m. That compares with more than £150m five years ago.
