The chairman of Debenhams has waded into a bitter row with one of its most powerful landlords after discovering it had held secret talks to hand some of its prized beauty departments to arch rival Next.
Mark Gifford is understood to have personally intervened after Hammerson, the shopping centre giant, cut a deal to hand five beauty halls to Next, ousting Debenhams.
After a flurry of emails and phone conversations, staff were told in recent days that Gifford has successfully blocked deals on two of Debenhams’ most favoured shops – its Bullring store in Birmingham and Silverburn, Glasgow.
Lighting the way: The Debenhams board, its lenders and administrators at FRP Advisory are working to resuscitate the business after it was twice forced into administration
Hammerson still plans to hand at least three of the contracts to Next under ‘flexible’ lease contracts, sources said, with one adding: ‘There are a lot of unresolved threads to this negotiation.’
The Debenhams board, its lenders and administrators at FRP Advisory are working to resuscitate the business after it was twice forced into administration, including most recently last month. They are using what they describe as ‘light touch’ administration measures as they prepare to reopen after lockdown.
They say they aim to keep control of as many of the chain’s 142 remaining department stores as possible and have already struck deals on 120 leases.
Gifford – referred to as a ‘bruiser’ by those who have witnessed how he has battled to reshape the business – went ‘through the roof’ upon finding out about the deal with Next, sources said.
He is understood to have threatened to strip the remaining stores of fixtures and fittings which the landlord had hoped would allow Next to open more rapidly after lockdown.
One retail source complained Hammerson’s attempt to oust Debenhams was ‘a shabby way to behave’.
One admitted: ‘Relations have been tense.’ The row could escalate further.
The Mail on Sunday has been told that Next is already in talks to sign other contracts that would see its name replace Debenhams on ten beauty halls, with landlords also ejecting Debenhams from any other floors it occupies in those locations and replacing them with other retailers.
It is also rumoured that landlord Intu is in talks with other retailers over Debenhams leases. Next and Mike Ashley’s Frasers group are among those said to be interested.
Intu and the other parties declined to comment. Next chief executive Lord Wolfson has quietly built up a range of 200 cosmetics and beauty brands that it sells online – including Estee Lauder, Clinique and Benefit.
His chain is sizing up Debenhams beauty and cosmetics departments which make up around 40 per cent of Debenhams sales – an estimated £600 million of the stores’ total turnover – among other outlets. Next hopes the new outlets will help to convince global cosmetics brands to supply it with more exclusive products.
Wolfson said earlier this month the strategy is ‘to create a new force in beauty retailing’.
Sources said it would be a major blow for Debenhams to lose its footing in major centres.
Prime locations allow Debenhams to drive a harder bargain with cosmetics labels and other key brands which still cherish the visibility that major high street locations can bring.
Sources said the situation is a reflection of the deepening rift between retailers and their landlords as well as the complexity of Debenhams’ position as it seeks to re-engineer the business.