Stores face ‘insolvency’ as BHS tries to cut costs


Landlords have been told that BHS’s new owner could use company voluntary arrangements after the retailer brought in KPMG in the past fortnight to advise it on its options. It is considering closing several of its 160-plus stores in an effort to turn the business around.

Retail Acquisitions bought BHS from Sir Philip Green last year for £1 and is in the process of reviewing its operation. The new owner has closed six stores already, but further closures are on the cards as it looks to cut costs and deal with a pension deficit of more than £200 million.

The Times reports that at the top of Retail Acquisitions’ agenda is lowering the rent that it pays on a portfolio of about 30 stores, including one in the north of England that it believes is costing it four times the market rate for comparable properties.

As part of these talks, the company is looking at the option of a CVA that would allow its landlords to elect to receive a lower rent before a decision was taken to close a store, though using the measure would be controversial.

Dominic Chappell, who heads Retail Acquisitions, has been leading the review of the BHS business, which one source said was designed to address the rental position within the next year, as well as sorting out what to do about a £207 million deficit in the pension scheme that is likely to have grown by the time it is next valued.

A spokesman for the company said: “BHS has stated publicly many times since the acquisition that it would like to take steps to address a number of unprofitable stores. This may involve discussions with some landlords and KPMG will help us in this process.

“We have made no secret of the fact that like other companies we have a pension deficit that we would like to address and we continue to take advice in relation to this complex area.

“Our turnaround plan is still in its first year. Although we still have a long way to go, we are entirely confident that we will regain our place as an iconic British high street brand.”