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Debenhams Squeezes Suppliers for Extra Cash

For some it’s the season for giving and for others it’s a time for demanding. Department store chain Debenhams dispatched a letter to all its suppliers soliciting contributions to assist in its expansion. The letter asked the suppliers to “support its commitment to ongoing investment,” promising that its success would “mutually benefit” all parties.

Leaving nothing to the imagination, the letter from Debenhams detailed precisely how the payments should be calculated and dispensed. Each supplier is asked to make two separate disbursements, the first of which should amount to 2.5% of the value of all outstanding payments due as of December 17. The second is also 2.5%, but this time of the total value of all open orders, also as of December 17.

Debenhams has a history of pressuring its suppliers to amend terms mid-contract. Last March, it tried to squeeze discounts out of its linen suppliers and unilaterally changed the payment terms to 120 days from 90 days.

Simon Herrick, chief financial officer of Debenhams, said the retailer “continues to make progress against the four pillars of [its] strategy to build a leading, international, multichannel brand.”