Debenhams has been plunged into fresh crisis after chairman Sir Ian Cheshire was forced to step down following a shareholder coup at the retailer’s AGM this afternoon.
Sergio Bucher was also voted off the Debenhams board, although he had the support of shareholders to continue on as chief executive.
The dramatic changes were prompted by a revolt from two major shareholders in the department store retailer, one of which is Mike Ashley’s Sports Direct.
The news comes on the same day Debenhams unveiled weak figures for the crucial Christmas trading period, where an overall like-for-like sales decline of 3.4 per cent was driven by a 3.6 per cent drop in UK like-for-likes.
Additionally, like-for-likes for Debenhams’ 18-week period ending January 5 was down 5.7 per cent, again underpinned by a UK decline of 6.2 per cent.
The figures were also a continuation of sustained decline in Debenhams’ fortunes in the last three years.
In 2018, it endured profit warnings and its end-of-year report in October saw the retailer swing to a massive loss before tax of £491 million – a record in the retailer’s 240-year history.
After today’s AGM, Cheshire – who first joined the Debenhams board in January 2016 and was appointed chairman the following April – informed fellow board members that due the decision of two major shareholders who voted against his re-election, he thought it was no longer possible for him to remain in the role.
He subsequently announced his resignation with immediate effect, and Debenhams’ senior independent director Terry Duddy was appointed interim chairman.
Bucher was also not re-elected to the Debenhams board principally as a result of the votes of the same two major shareholders, one of which is Ashley. While he received 44.15 per cent of votes in favour of his re-election, excluding those two major shareholders, the vote for him to continue on the board was approximately 99.6 per cent in favour.
As a result, the board and Bucher agreed that he should continue as chief executive of Debenhams, as the board viewed it in the best interests of the retailer for him to do so.
“I recognise that individual shareholders have wished to register their dissatisfaction,” Duddy said in a statement.
“I would like to thank Ian for his strong leadership of the board and his contribution to the business. We wish him all the best for the future. I am looking forward to working with Sergio.
“My first task is to meet with shareholders so that I understand any concerns that they may have.”
Cheshire said: “It has been a great privilege to get to know my Debenhams colleagues over the past three years.
“In unprecedented market conditions the team has worked incredibly hard to build a format for the future and a comprehensive plan to reshape the business, which will put Debenhams on the road to recovery and future success.
“Whilst it is right that I step down today, I wish the team at Debenhams every success in the future.”
Cheshire’s sudden resignation also comes after he issued Ashley with an ultimatum last month in which he ordered him to make an official offer to take over Debenhams or stay out of its affairs.
Ashley – who owns a 29.7 per cent stake in Debenhams through Sports Direct – had slammed the struggling department store for rejecting his £40 million interest-free loan offer in order to save it from collapsing, in exchange for more shares in the company.
While Ashley’s offer of a loan was largely interpreted as an attempt to take over, it instead sparked a bitter and public dispute between himself and Debenhams board.
Ashley steadily increased his stake in the department store chain throughout 2018, raising it from 23 per cent to the current 29.7 per cent.
This means Sports Direct, of which Ashley is a majority owner, is only three percentage points from the threshold at which it must launch an official takeover bid.