Angry investors forced Debenhams chief executive Sergio Bucher off the board yesterday, and the chairman out of the company.
The moves came after another plunge in sales left the department store group fighting for its survival.
Two shareholders - Mike Ashley's Sports Direct and Landmark Group - voted against the re-election of both men at the annual general meeting after they earlier said they needed fresh funding to prop up the business.
Chairman Ian Cheshire said he would stand down with immediate effect.
In a highly unusual move, the company said it had asked Bucher to remain as CEO and report to the board because they believed in his strategy.
"The board is mindful of its responsibilities to all shareholders and has full confidence in Sergio and in the management's plan to reshape the business," it said.
"As a result, the board and Sergio have agreed that he should continue as CEO of Debenhams," it added.
Once the UK's biggest department store chain, Debenhams has reported a string of profit warnings as it failed to keep pace with consumers moving online and to cheaper outlets, hammering its shares and wiping 80 percent off its market value.
Yesterday it reported some of the weakest trading on the UK high street, with sales down 6.2% at its main British business in the 18 weeks to January 5, and by 3.6% over the six-week Christmas trading period.
Sports Direct, controlled by founder and billionaire Ashley, owns a 29.7% stake in Debenhams.
It bought department store chain House of Fraser out of administration for £90m last year and analysts have speculated that Ashley might want to put the two department store groups together.
Striving to avoid the fate of collapsed rival BHS and House of Fraser, Debenhams has launched a programme to close 50 of its underperforming stores, putting about 4,000 jobs at risk.
Debenhams said net debt remained within the rules of its banking agreements but it had opened talks with its lenders about refinancing its borrowings and could seek to bring in new sources of funding to bolster its balance sheet.
Asset disposals have been put on hold during the talks, it added.
Ian Cheshire, a former CEO of Kingfisher, had been in the job since 2016. Bucher, a former Amazon, Nike and Inditex executive, took the top job in 2016.
"Given the decision of two major shareholders who voted against his re-election to the board, Sir Ian has concluded it is no longer possible for him to remain chairman," it said.
UK retailers are struggling with a slowdown in spending amid uncertainty whether Britain will manage an orderly withdrawal from the European Union in less than three months.
Debenhams said the changes it was making were working, with digital sales improving and trading in newly designed stores outperforming the rest of the chain.
It said it remained on track to hit an annual profit target of just £8.2m after saying it would find £80m of costs to remove.
"We have worked hard to deliver the best possible outcome in very uncertain times for retailers," CEO Bucher said.