Amid store closure news in the UK, Debenhams Malaysia plans expansion

This article first appeared in The Edge Financial Daily, on April 23, 2019.
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KUALA LUMPUR: News of London-listed Debenhams plc falling into administration two weeks ago — with the lenders taking control of the company — have raised concerns about Debenhams Malaysia’s retail business here amid a tough retail environment.

However, Debenhams Malaysia, which is operated as a franchise by Stellar Retail Sdn Bhd in the local market, is not expected to be impacted by what is happening in the UK. In fact, it plans to expand its presence here.

“What has happened in the UK has no bearing here. The Malaysian business is not affected. There is no bearing on Malaysia,” Stellar Retail managing director, Andy Jackson told The Edge Financial Daily when contacted.

Jackson said the retailer is on the lookout to open “a couple more stores within the next five years”.

In contrast, Debenhams in the UK announced in February they will close as many as 50 stores in the next five years. Debenhams has 165 stores in the UK.

Up until November 2018, Debenhams Malaysia was operating out of a total of three stores here: one in Gurney Plaza, Penang, another in The Curve, Mutiara Damansara, and a third one in Starhill Gallery, Kuala Lumpur.

The Penang store is the largest, occupying 18,000 sq ft of space, whereas the outlet at The Curve takes up 13,000 sq ft.

The store in Starhill, however, which measured 30,000 sq ft when Debenhams Malaysia opened its doors there in 2012, had to be shut as the entire mall is undergoing renovation.

At this juncture, Stellar Retail has yet to decide if it will reopen the store here, which was relocated from Lot 10, where it operated for two years from 2010.

When asked about propects of growth in the current retail market, Jackson said moving forward, “we want to cut back on sales and not rely heavily on promotions”.

On the retailer’s performance, Jackson said the market was very challenging in 2015 and 2016, when the goods and services tax (GST) was introduced.

However, things have been better in the past two years. “Things have ‘stabilised’ since the withdrawal of the GST. We hope that if the general cost of living can be addressed, things for the retail sector will improve further,” Jackson said, adding that it could take up to two years to see genuinely positive results.

Nevertheless, he said the company has “enough profitability to open new stores”.

Debenhams first arrived in Malaysia in November 2003, when it took up a 100,000-sq ft space in Berjaya Times Square, Kuala Lumpur. At the time, the outlet that was modelled as a department store was brought in by Berjaya Group’s BTS Department Store Sdn Bhd. In 2006, BTS Department decided to terminate their franchise agreement as the venture proved unprofitable.

In 2008, Debenhams found a new master franchisee in Stellar Retail and Jackson brought the store back into Malaysia’s retail scene, but not as a department store. It began anew on a smaller scale, with just 10,500 sq ft in The Curve, after having done away with consignment counters.