Debenhams Faces Supplier Payment Woes Despite New Funding

Debenhams Group has recently issued a warning to a select number of its suppliers regarding impending late payments, despite having secured a new £175 million borrowing facility just last month. This development signals ongoing financial pressures within the retail giant, raising concerns among its partners.

An internal company email, obtained by The Telegraph, revealed that Debenhams had communicated to suppliers for one of its smaller brands, admitting it was "running behind on payments." The email further requested these suppliers to confirm their capacity to deliver stock during September without immediate compensation. While FashionNetwork.com confirmed the situation with the company, the specific brand affected by these payment delays remains undisclosed.

This potential withholding of supplier payments comes merely months after a similar revelation by The Telegraph, which exposed significant delays, sometimes up to a month, in customer refunds for returned goods. At that time, the business acknowledged that it was processing refunds more slowly than usual, though it did not provide a definitive explanation for the delays.

The latest email concerning supplier payments emerges against a backdrop of increasing financial strain for the Debenhams Group. The company has reported a widening of its annual losses and a nearly 20% decline in sales. Furthermore, the value of its net assets has drastically shrunk from £280 million to a mere £3.9 million in the span of a year, underscoring the severity of its financial challenges.

When pressed for a comment on the situation, a spokesperson for Debenhams provided a brief explanation to The Telegraph, stating: "A junior colleague, in one of our smaller brands, emailed a small number of suppliers to work on capacity planning." This response, however, offers limited insight into the broader financial difficulties facing the group.