Debenhams has entered an agreement in principle with Li & Fung, the supply chain solutions partner for consumer brands and retailers, to develop a strategic sourcing partnership.
The move is part of the retailer’s programme of operational improvements to support the business turnaround.
In a statement, Debenhams said: “This agreement is expected to cover a material part of our own-brand sourcing over time and will deliver benefits for both our customers and our stakeholders, through improved product quality and lead-times; higher achieved margins; and better working capital efficiency. Initial orders under the agreement are expected to commence shortly.”
Chief executive Sergio Bucher said: “It gives us access to state-of-the-art technology in the LF Digital platform, providing end-to-end visibility across our supply chain. This will help us anticipate and respond more quickly to trends and our customers’ preferences, as well as delivering better quality product.”
The retailer has negotiated a £40 million credit line with its lenders to increase its liquidity headroom. “The support of our lenders for our turnaround plan is important to underpin a comprehensive solution that will take account of the interests of all stakeholders, and deliver a sustainable and profitable future for Debenhams,” said Bucher.
Hong Kong-based Li & Fung operates a global supply chain network with some 17,000 people in more than 230 offices and distribution centres across 40 different markets.