What the UK demise of Debenhams means for stores in the UAE

Franchise owner Alshaya Group says its outlets in the Emirates are unaffected

DUBAI - JUNE 19,2009 - Panoramic view of Debenhams shop in Dubai Mall. ( Paulo Vecina/The National ) *** Local Caption ***  PV Shop 38.jpg
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Alshaya Group, the Middle East franchise owner of Debenhams, said its outlets across the region would continue operating as normal despite the collapse of the department store chain in the UK.

The Kuwaiti family-owned business, which has 26 Debenhams stores across the Middle East, including nine in Saudi Arabia and six in the UAE, said business would be unaffected by Debenhams failing to find a buyer to save its business.

However, 12,000 British employees at 124 UK stores face losing their jobs, just a day after retail tycoon Philip Green's Arcadia fashion group entered administration, threatening about 13,000 jobs.

"Whilst the UK high street faces ongoing challenges, Alshaya Group confirms that today's UK news announcements about Arcadia Group and Debenhams do not affect its Middle East business operations and our stores will continue to welcome customers as normal," Alshaya told The National on Tuesday.

Debenhams, a feature of the UK high Street for more than 200 years, said it would start a wind-down of the brand while continuing to seek offers for all or parts of the business.

Alshaya Group also owns the franchise for several Arcadia fashion brands, including Topshop, Burton, Dorothy Perkins and Miss Selfridge.

Debenhams Group, which fell into administration for the second time in April, said its sale process to potential buyer JD Sports did not result "in a deliverable proposal".

“The administrators have therefore regretfully concluded that they should commence a wind-down of Debenhams UK, whilst continuing to seek offers for all or parts of the business,” the company said in a statement.

Debenhams staff in the UK were told the news on Tuesday morning, with the brand continuing to trade across the country and online to clear stock.

David Macadam, chief executive of the Middle East Council of Shopping Centres, said the impact to franchise holders of brands, such as Debenhams, going under occurs much later and “to a far less extent in the Mena region”.

"It takes time to filter through the system to reach this end of the world and in the meantime, it's pretty much business as usual, as long as the inventory is there," he said.

Sandeep Ganediwalla, partner at the Middle East practice of India's Redseer Consulting, said this is not the first time a UK chain has gone through administration without its UAE operations being compromised. He points to the collapse of Jamie Oliver's restaurant group last year, which did not affect the running of Jamie's Pizzeria in Dubai's Jumeirah Lakes Towers.

"There are a lot of brands in the UK or other parts of the world that have gone into administration but because this is a franchise operation, the franchise operators have decided to continue with the brand," said Mr Ganediwalla.

"It depends on whether customers think the brand is tarnished and whether sourcing continues. If the underlying designers go out of business and there is no stock for Debenhams to stock here, then that is a challenge. If that is not the case, I would not be surprised if Debenhams continues to operate in some form.”

He noted the US brand Borders, which went into administration in 2011, yet its UAE franchise owner Al Maya Group continues to operate 17 stores across the Emirates, with other outlets in Oman and Qatar.