Struggling British department store chain has appointed Hilco Capital to draw up contingency plans for a possible liquidation of the chain in the unlikely event that an attempt to sell the business ends in failure.

Debenhams on Tuesday said it would cut a further 2,500 jobs, while taking "all necessary steps" to give the chain every chance of a viable future.

The company said that the move to appoint Hilco Capital, first reported by Sky News on Saturday, was part of that process but not an indication that liquidation was a likely outcome.

"Debenhams is trading strongly, with 124 stores reopened and a healthy cash position," Debenhams said in a statement.

"The administrators have appointed advisors to help them assess the full range of possible outcomes which include the current owners retaining the business, potential new joint venture arrangements (with existing and potential new investors) or a sale to a third party." 

READ MORE: UK sees record recession over coronavirus pandemic

Covid-19 crisis

The British retailer faced hardship as it tried to cope with the latest blow to the country's battered retail sector from the Covid-19 crisis.

Debenhams shed hundreds of head office jobs in May and the company's recent decision to shed 2,500 jobs adds to thousands already announced by major British retailers, including Marks & Spencer, Boots, John Lewis and WH Smith.

Official data, also published on Tuesday, showed the number of people in work in Britain has suffered the biggest drop since 2009 and signs are growing that the coronavirus will take a heavier toll on the labour market as the government winds down its huge job-protection scheme.