Debenhams demands a little help from its suppliers (again)

 
David Hellier
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SUPPLIERS to Debenhams got a nasty shock yesterday when the retail giant wrote to them asking for a contribution to the group’s recent investment programme.

It’s not the first time they have been asked for extra support. Earlier this year they were asked to extend payment terms from 90 to 120 days.

In the latest missive, Debenhams, which has just completed one of the largest ever single redevelopments that Oxford Street has seen, asks for an effective 2.5 per cent discount on its payments to suppliers by the close of play last night.

The group cites the massive investment it has made in its brand, which includes opening 37 new stores in the past seven years (with 16 more in the pipeline), the £25m modernisation of the Oxford Street store and investment in its website.

Suppliers are being urged to support the plan since the new investment provides a significant opportunity to grow their businesses alongside Debenhams.

It’s true that if Debenhams has planned its investment programme right there will be opportunity for growth that will benefit most suppliers.

But those same suppliers have not been instrumental in formulating the plans and therefore are totally dependent on the Debenhams board to have got it right. If the board’s got it wrong, suppliers will lose out from a programme they will have part-funded but had little chance to influence.

Suppliers will not be pleased by this demand so soon before Christmas. There will be a hit to their cash-flow, which in some cases could be critical. They will at least want to know whether falling into line will provide some sort of guarantee they will be kept in the supply chain for the months ahead.

NOISE BUT NO ACTION OVER AIRPORTS
There has been so much debate about the future of London’s airport capacity and yet so little action. Even after the publication of Lord Davies’ commission’s interim report (all 226 pages of it) yesterday, there is still only the prospect of months of more uncertainty and more highly-charged debate.

Few would disagree with Nick Baveystock, director general at the Institution of Civil Engineers, who said yesterday: “Indecision, however, still blights this issue as questions around the need for a single hub remain unresolved, and the UK continues to slip behind its European rivals.”

There will be no building for years to come. Even under Heathrow’s own proposals the north west runway at the airport would not be ready until 2026 at the earliest.

Politicians of every political hue will now be able to shunt the issue into the long grass until Lord Davies’ final report, which will not be published until after the election.

For what it’s worth, the Davies commission has earmarked expansion at Heathrow and Gatwick as favoured options, with the project favoured by Boris Johnson requiring further analysis and work.

Somehow it feels that by the time we reach the end of the process the rest of the world will have left us all behind.

SHINE ON YOU CRAZY DIAMOND
When you raise money for a shell company that’s planning to invest in a country far from home, it can’t be very reassuring to know that the last well-known person to have tried this sort of thing was Nat Rothschild.

But Bob Diamond, who left Barclays when the bank became embroiled in the Libor scandal, raised a better than expected $325m for his African bank venture Atlas Mara. The enthusiasm to back Diamond is impressive. No doubt Bob’s decision to invest $16m of his own cash was something of a prompt for others to get behind it too.

david.hellier@cityam.com
Follow me on Twitter: @hellierd

Allister Heath is away