AROUND 20 branches of Debenhams could close this year as the company seeks to renegotiate with creditors, it is understood.

The department store chain – which has a major branch in Bournemouth – is exploring a company voluntary arrangement (CVA) to reduce its debts.

The CVA would allow Debenhams to negotiate reduced rent bills and to speed up plans to close under-performing stores.

Debenhams announced last October that it was increasing its store closure plans from 10 shops to 50, putting 4,000 jobs at risk. If the CVA is agreed by creditors, it is understood the closure programme could be accelerated, with 20 branches shutting this year.

Debenhams posted a record pre-tax loss of £491.5million last year and saw sales decline over Christmas.

A CVA is the controversial insolvency procedure which allows struggling firms to cut rents and shut under-performing branches. New Look, Carpetright, Mothercare and Beales are among the retailers to have previously used the process.

Sports Direct founder Mike Ashley owns a 29 per cent in the business, close to the level at which he would have to launch an official takeover bid. He acquired House of Fraser last year and is among the bidders for HMV, which went into administration just after Christmas.

Debenhams’ chairman Ian Cheshire stepped down last month and chief executive Sergio Bucher said he would stay on but not as a director, after Mr Ashley voted against them.

Bournemouth’s Debenhams, previously called Bobby’s, has been one of the town’s flagship department stores for generations.

The latest developments at Debenhams come as the retail industry reported a “welcome improvement” in sales growth in January, following the worst December performance in a decade.

The British Retail Consortium (BRC)-KPMG retail sales monitor said shoppers were focusing on value for money.

Total retail sales increased by 2.2 per cent year-on-year in January, following zero year-on-year growth the previous month – the worst December performance in a decade.

January’s growth in sales was the highest since last June.

Helen Dickinson, chief executive of the BRC said the latest figures were “a welcome return to growth this month after December’s disappointing sales figures”.

She added: “But while retail discounts helped tempt cautious consumers, there is no guarantee this momentum will continue after the sales have finished.

“And it will not just be brick-and-mortar stores looking nervously to the future, as online sales continued to grow below the long term trend.

“Furthermore, the risk of a disruptive no deal Brexit could see these fortunes reversed.”