Just days after taking over the BHS store chain its new owners have enlisted property agents to review options for nearly a third of the chain’s 171 stores, including sale or possible closure.
The future of roughly 50 stores, including those in Bristol, Birmingham, Cardiff, Edinburgh and Manchester, is being weighed up by Retail Acquisitions after the little-known group of investors bought BHS from retail tycoon Sir Philip Green for £1. The company employs 11,000 people in the UK.
Retail Acquisitions said BHS’s outlets in Oxford and Fosse Park, near Leicester, would close in the next few months and this had already been scheduled before it acquired the retail chain. But a spokesman insisted that there were a number of options on the table for other stores including renegotiation of leases or letting out surplus space to other businesses. It has appointed agents Jackson Criss, Charles Palmer Property and Vail Williams to considerthe choices.
The company said in a statement: “Property consultants have been appointed, but this does not mean that any leases that may be under review will be sold, and certainly does not mean that store closure is the only option.”
However it said BHS already had a strategy in place to offload loss-making stores with Green having overseen the closure of outlets in Canterbury, Cardiff, Aylesbury, Bath and Thanet over the last 18 months. Agents told the trade journal Property Week that five stores – Birmingham, Cambridge, Gloucester, Lakeside Thurrock and Meadowhall in Sheffield – were confirmed to be on the market.
Clothing retailers TK Maxx and Primark, which has previously bought a number of BHS outlets, are thought likely to be interested in some stores.
But property sources said Retail Acquisitions would struggle to raise cash from the 50 or so stores under review. This is because many are burdened with rent bills above the current market value, or would involve heavy costs to renovate, due particularly to the likely presence of asbestos in old buildings.
“Some of these leases you couldn’t give away,” one property source said.
Retail Acquisitions is led by former racing driver Dominic Chappell who knows Green from Monaco where his wife Tina, who was the main shareholder in BHS until last week, lives. Chappell, who does not have a background in retail, is a former bankrupt and has been involved in a number of failed businesses including the Island Harbour development in the Isle of Wight.
The group has insisted it has the resources and the right plan to turn around the business, announcing the appointment of Darren Topp, BHS’s chief operating officer, as interim chief executive yesterday.
Topp, who replaces BHS’s former managing director Richard Price, who is leaving to join Tesco, said: “There are clearly some challenges ahead and no magic wand we can wave but we have a clear strategy which is already showing some signs of success with the best sales performance for a decade, and we continue to trade positively.”
However, industry watchers are sceptical about the future of BHS which made a £70m loss in 2013 and is weighed down by a pension deficit of at least £100m. The fund is due for its latest valuation at the end of this month and Chris Martin, chairman to the trustees of the BHS pension fund, told the Guardian that the new figure “is likely to be significantly higher than £100m”. Other pension experts believe the fund could require around £500m in funding to ensure it meets all its liabilities.
