Debenhams: Where it went wrong for retail giant – Yorkshire Post Letters

THE Debenhams problem is an example of what has happened over recent years. Texas Pacific Group, CVC and Merrill Lynch Private Equity invested £600m of equity to acquire Debenhams in 2003, before trebling their investment in three years after selling off freehold property and cutting costs.

That left Debenhams with £1bn of debt and little room to improve its bottom-line performance during times of tougher trading conditions.

This is the cause of all of the problems. Rather than being debt-free and owning the majority of their own shop premises, they now found themselves having to pay ever increasing rents to greedy landlords.

Unless the staff at Debenhams suddenly became the most expert salespeople on the planet, they would never make enough money to keep the business healthy on a long-term basis.

Primark has become very successful by stocking an ever changing range of fashion items alongside the normal regular supply of jeans and tops.

Other retailers have not adapted to a fast moving market, often as a result of a close relationship with old British manufacturers who have not invested in the modern machinery to facilitate regular changes of design.

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