Sergio Bucher, the chief executive of Debenhams, is being handed a £700,000 payoff despite presiding over the department store chain’s collapse into administration.
On Thursday the retailer confirmed that Bucher was leaving and that its chairman, Terry Duddy, would temporarily take over ahead of a major store closure programme, to be unveiled next week, that will put thousands of jobs at risk.
Bucher, a former Amazon executive, has had a disastrous two years at the helm of Debenhams, and in recent months had been under siege from Mike Ashley’s Sports Direct, its biggest shareholder. Ashley has continually criticised the retailer’s poor performance and parlous financial state from the sidelines. The hostilities culminated in January when the Swiss-Spanish Bucher was ousted from the retailer’s boardroom after Ashley and another major shareholder voted against him.
Last week the stock exchange-listed group, which employs 25,000 people, was taken over by its lenders in a pre-pack administration that wiped out shareholders including Sports Direct. A pre-pack involves placing a company into administration before immediately selling it to a connected party – in this case a group of banks and hedge funds – while shearing off a chunk of its debts.
In March the indebted chain secured a £200m package of new loans and, with this new financing in place, Bucher said it was “time to move on, knowing the company is in good hands with a plan that will deliver a sustainable future”. Bucher, who was on a basic salary of £700,000, had a contract with a 12-month notice period.
Debenhams’ 165 UK stores have continued to trade as normal throughout the financial restructuring, but its new owners want to press on with a plan to close about 50 stores using an insolvency process known as a company voluntary arrangement. A growing number of retailers, struggling as sales shift online, are using CVAs to scale back their high street presence and reduce rent bills. Considered a last resort for ailing chains, the plan must be signed off by landlords.
With the debt restructuring out of the way, Duddy said the group had a business plan that would enable it to rebuild profits and reduce its £520m debt pile. “Debenhams now has a clear path towards a viable and sustainable future and we have Sergio and his team to thank for that,” he said. “With a positive, professional approach, he [Bucher] has acted at all times in the company’s best interests.”