Debenhams shares slide 15 per cent today after KPMG was called in to help draft plans to turnaround the fortunes of the high street stalwart.
The department store group is said to be considering a list of options including a company voluntary agreement (CVA), a controversial insolvency procedure used by struggling firms to shut under-performing shops.
The company has brought in KPMG to help draw up the turnaround plans, according to The Sunday Telegraph which first reported the news.
Debenhams issued a trading update this afternoon in reaction to media reports, saying it expects full-year pre-tax profits of around £33 million before exceptional items, which is within the current market range of £31m to £36.5m.
Underlying earnings are forecast to come in at £157m, with net debt of approximately £320m.
The group assured that it has continued to strengthen its financial position to ensure flexibility amid “volatile market trading conditions”.
Chief executive Sergio Bucher said: “The market environment remains challenging and underlying trends deteriorated through the summer months.
“Nevertheless the product and format improvements we have tested are gaining traction and we are ready to scale up some of our strategic activity ahead of peak.
“Having put in place a leaner operational structure and strong leadership team, and taken action to strengthen our financial position, we are well equipped to navigate these market conditions and take advantage of any trading opportunities that emerge.”
Chairman Ian Cheshire reiterated that the board is continuing to work with its advisers “on longer term options, which include strengthening our balance sheet and reviewing non-core assets.
“This activity is in order to maximise value for shareholders and protect other stakeholders, including our employees.”
In June, Debenhams issued its third profit warning this year as trading came in “below plan”.
To compound matters, the group is also the subject of takeover talk, with speculation building that Mike Ashley is set to merge it with his newly acquired House of Fraser.
Ashley owns just under 30 per cent of Debenhams, close to the threshold at which he must launch an official takeover bid.