Debenhams Group, recently renamed from Boohoo Group, is delaying payments to some suppliers, raising fresh concerns over the company’s financial health.
According to an internal email reported by The Telegraph, the group told certain suppliers it was “running behind on payments” and asked them to confirm how much stock they could deliver in September without receiving additional payments.
The development follows earlier issues flagged in the summer, when customers were waiting up to a month for refunds on returned items. At that time, the company acknowledged delays in processing refunds but did not provide further explanation.
In August, the group announced it had secured a new US $ 218 million borrowing facility to strengthen its balance sheet. However, the arrangement has been criticised by major shareholder Frasers Group, owned by Mike Ashley. In a letter to Debenhams’ chairman, Frasers questioned the decision to accept financing with an interest rate 7.3 percentage points above the Bank of England’s base rate, arguing that cheaper options were available. The shareholder warned that the deal risked funds being “sucked out” of the business.
The company’s financial performance has deteriorated sharply. Annual losses more than doubled to US $ 433 million, compared with US $ 199 million the previous year. Revenues fell nearly 20% to US $ 983 million, while net assets dropped from US $ 348 million to just US $ 4.9 million.
Analysts at Shore Capital said in August that Debenhams appeared “very constrained” as it faced an increasingly severe cash crunch.
