Shares in Debenhams plummeted more than 17 per cent at the open after it emerged the retailer has brought in advisers in an effort to turn the business around.
The department store has issued three profit warnings this year, and announced a series of job cuts, while its share price has tumbled by two thirds since January.
Debenhams has appointed advisers from KPMG to look at options for the future of the business, which could include a potential company voluntary arrangement, and possible store closures, which would put jobs at risk.
The chain will also raise money by selling its Scandinavian business, Magasins du Nord, as part of a strategic review of non-core assets it announced in June.
The company said: “Like all companies, Debenhams frequently works with different advisors on various projects in the normal course of business.”
The move comes amid a downturn on the British high street, with a number of household names facing severe financial difficulties.
House of Fraser recently collapsed into administration after a CVA aimed at cutting costs failed to impress creditors. The chain was subsequently bought by Sports Direct founder Mike Ashley.
Meanwhile, Mothercare announced earlier this year that it would close 50 stores under a CVA, and Marks & Spencer said it would close 100 shops over the next four years.
AJ Bell’s investment director, Russ Mould, said the market is “clearly taking seriously” the reports that KPMG has been appointed to advise Debenhams.
He noted: “The struggles at Debenhams follow the collapse of rival House of Fraser into administration over the summer and another thing both have in common is a material presence on the shareholder register for Mike Ashley’s Sports Direct.
“Speculation that he might launch a bid for Debenhams after capturing House of Fraser in August is likely to follow.”
Mr Ashley recently increased his stake in Debenhams to 29.7 per cent, bringing him close to the level at which he must make a takeover bid, and analysts previously said this is possibly on the Newcastle United boss’s agenda in the long-term.
