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Debenhams may rent store space to hot-desking firm
Debenhams is negotiating to rent out space in its flagship department store to hot-desking company WeWork in a move to save costs.
The FTSE 250-listed retailer, which has seen its shares fall more than 50% over the past two years, is looking for interested companies to will rent large parts of its portfolio of 240 department stores. Debenhams' property estate, with unexpired lease lengths of around 20 years, have become a financial weight around the company's neck amid the rise in internet sales.
Last year chief executive Sergio Bucher said the retail company would close 10 stores, downsize others and look for partnerships with other firms to share the space.
Another option that they have been trying out is opening in-store gyms to fill unused parts, where Debenhams has teamed up with Sweat! to initially open three gyms.
The talks between WeWork and Debenhams are at an early stage, Bloomberg reported, and it is still unclear if an agreement will be reached. With the deal, the US hot-desking firm will be close to becoming London's No.1 private-sector user of office space.
Debenhams, like many other non-food retailers, has been suffering a decline in recent year, capped off by a gloomy Christmas, which has seen its share price shrink to below 30p from above 100p four years ago, taking it market valuation to around £350m.
Earlier this week Sports Direct, which has been experimenting with concessions in some Debenhams stores, increased its stake in the department store group to 29.7% and talked about the "huge value" combining the two company's online functions and said "there is scope for greater collaboration in the UK in order to roll out an elevated offering to consumers... across the spectrum".
Other UK retailers like Tesco, Sainsbury's and Next have also been looking into filling their oversized stores through partnerships, with Sainsbury's acquisition of Argos designed to add store concessions and improve its click-and-collect logistics and internet sales.