The sports chain was the only bidder for the firm, which is currently in administration, and had appeared to be approaching a purchase deal at the end of last week.
However, the collapse of Arcadia Group – the biggest concession stand operator across Debenhams stores – is thought to have changed the calculations of JD Sports.
Debenhams’s 124 stores are now set to shut down, with staff reportedly told on Tuesday morning that their jobs would go if another buyer cannot be found.
Administrators Hilco told the BBC they had “regretfully concluded” that they should start winding down operations, while continuing to seek offers for all or parts of the business.
In a brief statement to the London Stock Exchange, JD Sports Fashion said “discussions with the administrators of Debenhams regarding a potential acquisition of the UK business have now been terminated”.
Debenhams has been looking for a buyer since the summer, after sliding into insolvency in April. If a buyer cannot be found soon the firm faces going into liquidation or being wound down.
The company still has around 12,000 employees, having already cut 6,500 jobs since spring. Debenhams’s former chair, Sir Ian Cheshire, said he felt “desperately sorry” for the firm’s workers.
He said Debenhams had been caught out with too many high street outlets on long rental leases in the aftermath of the pandemic.
“You’ve got to be so much faster and so much more online,” Sir Ian said, adding that the chain would have been better placed to survive the slump with far fewer than the 124 stores it currently operates.
The latest hit to the high street comes as some 13,000 staff of Sir Philip Green’s Arcadia Group face an anxious wait following the business collapsing into administration. The high street giant, which includes the Topshop, Dorothy Perkins and Burton brands, has hired Deloitte to handle the next steps.
No redundancies have been announced as a result of the appointment and its 444 stores will continue to trade, the administrators said – with many still due to reopen on Wednesday when England’s lockdown is lifted.
On Monday, Mike Ashley’s Frasers Group said an offer for a £50m lifeline for Arcadia was rejected. The administrators said they will be “assessing all options available”, which could see brands sold off in separate rescue deals.
Ian Grabiner, chief executive of Arcadia, said: “This is an incredibly sad day for all of our colleagues as well as our suppliers and our many other stakeholders … in the face of the most difficult trading conditions we have ever experienced, the obstacles we encountered were far too severe.”
Retail trade union Usdaw has said it is seeking urgent meetings with Arcadia’s administrators in a bid to preserve jobs. Dave Gill, Usdaw national officer, said: “Now that Arcadia is in administration, it is crucial that the voice of staff is heard over the future of the business and that is best done through their trade union.”
Arcadia will continue to honour all online orders made over the Black Friday weekend and will continue to operate all of its current sales channels.