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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden (now), Katie Allen and Damien Gayle

BHS falls into administration: MPs point fingers at Philip Green - as it happened

People walk past a branch of BHS on Oxford Street in London this morning
People walk past a branch of BHS on Oxford Street in London this morning Photograph: Peter Nicholls/Reuters

And finally, here’s our editorial on the collapse of BHS, and the long run of mistakes and poor business practices that led to today’s administration:

The Guardian view on BHS: murder on the high street

It concludes:

As the government-run Pension Protection Fund prepares to rescue the BHS pensioners, the familiar mismatch between private profits and public losses is in evidence once again.

eanwhile, hollowed-out husks could soon blight 100-plus high streets, yet another story of common space being disfigured after private greed enjoyed free reign. And a community used to being fleeced could be left with another nasty outbreak of British heist sores.

And on that note, we’re wrapping up until tomorrow... Goodnight, and thanks for the comments. GW

The BHS crisis makes the front page of Tuesday’s Guardian, and the news that its newish owners have taken £25m out of the firm.

Sarah Butler has looked into how the Green family have benefited from BHS over the years, and writes:

When Sir Philip Green bought BHS in May 2000, he insisted it would not be rocket science to revive the ailing high street retailer. After paying £200m, he was convinced he had the skills to secure its future and make it the foundation of a sprawling retail empire.

But last year, after failing in his mission, Green sold BHS for £1 to a little known group of investors who have steered it into collapse in just over 12 months. His dreams for the chain may have come to nothing, but Green’s family have still been big winners from BHS, taking out more than £580m in dividends, rental payments and interest on loans to help fund a lavish lifestyle....

Since May 2000, the Green family and other shareholders have taken £586m out of BHS

More here:

Writing in the Guardian tonight, retail expert Mary Portas argues that BHS could have been saved from collapse with a bit more imagination.

Here’s a flavour:

If I had been at British Home Stores I would have looked at today’s market place and created a brand that is relevant for today’s shopper.

I would have gone totally after the value market, but made it functional and cool.

I would have started with where it was good – the lighting. Then I would have extended that to become a modern British lifestyle retailer at a great price.

Look at Tiger, which has come on to our high streets. It has done an extraordinary job of taking that basic fundamental market, that was the old Woolies, and made it sexy.

Imagine if British Home Stores’ ground floor was like Tiger, its fashion floor like Uniqlo or Primark and its home stuff like Ikea. Value with sex appeal all under one roof. Then add some small startups that are all young British makers or designers....

Summary: MPs point finger at Philip Green

It’s a balmy 16 degrees in Monaco tonight. But if Sir Philip Green is there, he may just have felt the chill of criticism from the House of Commons.

Labour’s Angela Eagle put the former BHS owner firmly in the spotlight this afternoon, saying he faces “serious questions”.

She basically accused Green of taking far more out of BHS (£422m) than he paid for it (£200m), before ‘walking away’ to his favourite tax haven. That will sting Green, who is sensitive to criticism over his ownership of BHS.

But the toughest criticism actually came from Conservative MP Richard Fuller. He gave Green both barrels, saying he actually received ‘30 pieces of silver’ for BHS, if he knowingly abandoned workers and pensioners to their fate.

Fuller also channelled former PM Edward Heath, using the killer phrase ‘the unacceptable face of capitalism’ to describe those who renege on their pension liabilities.

A rare experience, to be compared to both Tiny Rowland and Judas.

MPs also remember the experience with Comet, where the taxpayer found itself on the hook for thousands of redundancy payments. They won’t accept the Pension Protection Fund being stung this time, if it can be avoided.

And if Anna Soubry had a secret rescue plan for BHS, she’s keeping it to herself. The government view is that the retailer is a victim of changing shopping patterns and structural change - which is why finding a buyer has been so tough. Soubry kept repeating that BHS stores are open, but if a buyer isn’t found soon, that won’t last.....

Updated

The final question goes to Martin Docherty-Hughes, SNP MP.

The real scandal is that BHS workers face redundancies, and losing 10% of their pensions. Can the minister promise that all inquiries into BHS will be open and transparent, and that the ‘full force of the law’ will be used, if needed?

Yes, Soubry replies.

And that’s the end of the session.

Labour MP Diana Johnson warns parliament that BHS could be a repeat of the collapse of Comet.

When Comet went into administration in 2012, there were 7,000 redundancies and the taxpayer paid up to £100m in redundancy costs.

Comet had been owned by a private equity firm which bought the firm for a pound, loaded it with debt, and then walked away.

The government should publish its report into Comet, so we can see if lessons can be learned.

Anna Soubry promises to find out what happened to that report.

Cardiff MP Jo Stephens asks whether the Insolvency Service has the resources to help BHS workers, given its budget is being cut.

Soubry says she has full confidence in the insolvency service.

Labour MP Gavin Shuker says the UK retail sector is dominated by low pay and lack of opportunity, and also dominated by women workers.

Will the government do more to help regenerate the sector?

Soubry says employers she has met are committed to helping their staff develop, but agrees that anything that helps female workers must be welcomed.

SNP MP Roger Mullin says BHS workers are paying the price for Philip Green’s failure, while he awaits for his new yacht.

Why shouldn’t Green be forced to pay the full £591m pension blackhole?

Soubry says that it’s important to do the right thing for workers who have paid into a pension their whole working life.

Our market economy is dangerously undermined when the privatisation of vast profits isswiftly followed by the projections of similarly large losses onto other people, whether taxpayers or pensioners, says Conservative MP Steve Baker.

Could the government look at the treatment of excessive debt, to avoid a repeat?

Soubry says there are always lessons to be learned, but reiterates that BHS is still open and looking for a buyer.

Updated

Q: Will Anna Soubry meet with the USDAW union to discuss how to save BHS jobs?

I’ll meet with pretty much anyone, Soubry replies. She’s happy to meet USDAW, and try to persuade them to change their view on Sunday trading.

Q: Does Soubry know whether the BHS trustees signed off the BHS £1 last year. Were the Pension Protection Fund involved? And if not, could we close this loophole?

Soubry says she doesn’t know, but will write and find out....

Grimsby MP Melanie Onn says her constituency has lost Woolworths, Comet, Staples, Phones4U and now a WHSmiths store.

She asks Soubry if she is concerned that BHS generated £100m through ‘negative goodwill’, which was then paid out in dividends rather than reinvested.

Soubry replies that she actually recently shopped in Grimsby (eliciting an inaudible, but seemingly amusing, reply from Onn).

Updated

Soubry replies that capitalism must have a caring heart.

She agrees that Fuller is raising very serious issues, and we must see what conclusions the regulators come to.

If there are any suggestions of impropriety, we will come after people, she adds.

Tory MP: Was BHS sold for 30 pieces of silver?

Richard Fuller, Conservative MP, says that the former owner of BHS [Philip Green] may have gone “laughing all the way to the bank” when Retail Acquisitions offered to buy the group for £1.

But....

If that sale was done on the understanding that he was avoiding a responsibility for those pension losses, then £1 was equivalent to 30 pieces of silver for that betrayal of the employees and pensioners.

There is a reputational question here for Philip Green to answer, Fuller continues. The minister must write to him, and ask him to address these issues.

And the government must assess the Pension Protection Fund, to avoid “this unacceptable face of capitalism” of passing losses onto the taxpayer.

Updated

SNP MP Alison Thewliss asks what the government is doing for workers at other companies why rely on BHS.

Soubry says that we know that other companies in a supply chain suffer when one business fails. That’s why we must stay positive and hope a buyer can be found.

Conservative MP Peter Bottomley say he visited a BHS branch today and told workers that they have the full support of the House of Commons.

Workers jobs and pensions must be a top priority, he adds.

BHS has suffered from online sales, Soubry replies, and also from the fact people are less loyal to individual retailers these days.

If you’ve got BHS vouchers, go and spend them and support the staff, and the high street, she declares.

Labour MP Ian Wright says it cannot be right for Philip Green to load BHS up with debt, fail to invest, pay his wife £400m in dividends, and live in a tax haven.

Something is gravely wrong, he says. New legislation is needed to prevent owners making a fast buck.

Soubry says that any allegations of impropriety must be taken very seriously.

The SNP’s Hannah Bardell says her party stand in solidarity with BHS workers at this time.

She says there are some very serious allegations in the newpapers today, including the FT’s article about the £1bn ‘siphoned out of BHS’

The gap in BHS’s pension fund merits serious investigation, she adds.

Anna Soubry repeats that BHS stores are still open, and it’s important not to talk the company into a deeper crisis.

Conservative MP Mark Field says he is concerned that the Pension Protection Fund is being used as a bargaining chip, rather than in exceptional cases when a firm fails.

Field says he shares the opposition’s concern over the behaviour of the current and former BHS owners.

Soubry agrees that the PPF should not be abused.

Anna Soubry’s statement on BHS is online here.

Updated

Responding to Eagle, Soubry says her concern is for the workers at BHS, and its creditors.

Eagle is turning this into a party political game, she claims.

The Pensions Regulator is investigating the BHS pension blackhols now. And the insolvency service will take allegations of malpractice very seriously.

Soubry also claims that the opposition would have more credibility if they hadn’t voted against Sunday trading changes - which might have helped BHS.

Philip Green has taken hundreds of millions out of BHS, and then walked away to his favourite tax haven leaving the pensions protection scheme to pick up the bill, Eagle continues.

She cites the Guardian’s revelation that BHS’s new owner, Retail Acquisitions, has received more than £25m in the last 13 months.

She asks Anna Soubry to comment on Green’s conduct as BHS’s owner, and whether she agrees that owners should be forced to make a fair contribution

Green has reportedly offered £40m to the pensions black hole - is that acceptable?

And will the government review the law to prevent irresponsible owners walking away and leaving others with the liabilities?

Eagle: Philip Green has serious questions to answer

Labour shadow minister Angela Eagle responds to Anna Soubry.

11,000 BHS staff will be very worried today. All MPs must hope that BHS can be sold as a going concern.

But if the worst happens, the government must offer support to workers.

Philip Green has some serious questions to answer, Eagle continues, having bought it for £200m, taken £422m of dividends, then sold it for £1.

He seems to have taken out far more from the business than he paid for it, she says.

The pension fund had a £500 surplus when Green bought it, but this had become a deficit of hundreds of millions when he sold it, Eagle adds.

Anna Soubry adds that there has been “some speculation about the BHS pension scheme”.

She can’t comment directly, but understands that the Pension Protection Fund is assessing the final funding position of the scheme, and who is responsible for its shortfall.

Anna Soubry's statement on BHS's administration

Over in parliament, small business minister Anna Soubry is making a statement about BHS’s collapse now.

Soubry says that it is very difficult time for all the employees - up to 11,000 across the UK.

It’s also a difficult time for the company’s creditors.

The BHS name has been synonymous with British high streets for over 80 years, she continues, and still has a high street presence.

She continues that the “clear message” is that BHS is still open for business.

I understand that there are no plans for immediate redundancies or store closures, and that the administrators are looking to sell BHS as a going concern.

If you’ve been following the blog today, you’ll already know that Damien has been interviewing shoppers about the decline and fall of BHS.

Here’s his full piece from Oxford Street:

While we wait for the government’s statement on BHS, here’s a picture of Sir Philip Green’s new superyacht:

BHS paid millions to owner in 13 months before administration

More details are emerging of payments made to Retail Acquisitions, which bought BHS in 2015 for £1.

Graham Ruddick and Sarah Butler report that more than £25m was paid from BHS to its owner, Retail Acquisitions, in the 13 months between the department store’s sale and it collapsing into administration.

Sources with knowledge of BHS’s finances say that the payments to Retail Acquisitions included £2.8m in management fees, £2.1m in salaries and wages, £11m in legal and professional fees and £10m in interest payments.

Here’s their full story:

And if you are just joining us, here’s the main news story on BHS collapsing into administration:

Meanwhile, Simon Goodley has been looking into Dominic Chappell, the 49-year-old racing driver-turned-entrepreneur, who led the consortium that bought BHS from Sir Philip Green for £1 last year.

FTSE closes down 0.8%

Back in the City, the FTSE 100 has closed down 0.8% or almost 50 points, at just shy of 6261. Miners and energy companies have pulled the wider index down as oil prices have slipped - Brent crude is down 0.7% at $44.8 per barrel.

As we reported earlier, the news that BHS has collapsed into administration, did little to dent investor appetite for retailers’ shares. Marks & Spencer shares are up more than 1%, ASOS shares are up 0.9% and Boohoo is up 5.3%.

But Debenhams shares are down 1% and Next is down 0.2%.

Over on Wall Street it’s been a subdued start to the week for US stocks. Hurt by weaker oil prices and jitters ahead of Wednesday’s Federal Reserve decision on interest rates, the Dow Jones industrial average is down 0.6% at around 17,893 and the S&P 500 is down 0.5% at 2,081.

A closed Woolworths store in Glasgow

Earlier we heard from the head of shopworkers’ union Usdaw, John Hannet, on how administrators will want to avoid repeating mistakes made after Woolworths’ demise in 2008.

Readers may remember that in 2012, 24,000 former staff of Woolworths were awarded compensation worth 60 days’ pay because the stores had been closed without consultation after the chain collapsed.

Nicholas Le Riche, employment partner at the law firm Bircham Dyson Bell says although BHS stores are still trading for now and a buyer for the company is being sought, “it is likely that stores will be forced to close resulting in widespread redundancies.”

BHS will be expected to consult collectively with the Usdaw trade union and other relevant employee representatives, says Le Riche. He explains:

The need to follow a fair process was illustrated by the collapse of Woolworths, which saw large claims over how the redundancy consultation had been conducted. On top of compensation for unfair dismissal, employees may also be entitled to up to 90 days’ pay if there has been a failure in the collective consultation procedures.


More commentary is coming in on how much, or how little, BHS’s position is a function of the current retail climate.

Gary Hobbs, senior equity analyst at Investec Wealth & Investment, says:

“Whilst conditions on the high street have been tough, as witnessed by the likes of Next, we suspect that the travails at BHS are as much a function of their financial position as they are a reflection of slower trading.

“We do not envisage any material ramifications elsewhere for retailers, though there might be some work to do for the landlords of BHS’ store portfolio.”

Some of BHS’s retail rivals - with the notable exception of Next - seem to be faring well from its bad news on stock markets this afternoon.

Connor Campbell, financial analyst spread betting company Spreadex comments:

After teasing flatness at lunchtime the FTSE gave up the ghost as the day went on, reverting back to a 40 point loss as a dismal showing from its commodity stocks compounded the sense of unease that greeted BHS filing for administration.

“BHS’ rivals have largely benefited from its collapse this Monday, be it online stores like ASOS and Boohoo (the latter seeing a 5% rise ahead of its preliminary results tomorrow), or similarly recognisable high street staples like Marks & Spencer and Sports Direct. Interestingly Next bucked this trend, falling nearly 1.5% as the company’s investors wondered if they were looking at the Ghost of High Street Future.”

Shares in Next are down around 1.2%, ASOS shares are up 0.5%, Boohoo is up 4.7%, Sports Direct is up 0.6% and Marks & Spencer shares are up 0.8%.

What's BHS, asks young shopper

Amy West, 23: “My nan used to take me there.”
Amy West, 23: “My nan used to take me there.” Photograph: Damien Gayle for the Guardian

Back on Oxford Street, Damien Gayle, has been sounding out more shoppers on what went wrong at BHS.

“What’s BHS - is that a sandwich?” asked Jason Knight, 21, as he and his friends drank coffee outside Starbucks. He appeared to only be half joking.

But his friend Amy West (pictured), 23, was at least aware of the retail chain’s existence. Had she ever shopped there?

“I have, when I was a kid though, my nan used to take me there. Me and my nan used to pop into the shopping centre and she used to say: ‘I just have to go into BHS’.”

If you are just joining us, here’s our latest news story on BHS collapsing into administration after failing to agree a last-minute deal to rescue the department store chain.

Amid the the biggest failure on the high street since that of Woolworths in 2008, there are fears for the jobs of the BHS’s 11,000 employees.

The government is expected to make a statement on the failure of the 88-year-old retail group in parliament later this afternoon - probably around 5pm.

City of London

On financial markets, it’s been a lacklustre day for the FTSE 100 share index.

The bluechips index is currently down around 44 points, or 0.7%, 6267.

This week marks one year since the index hit its record closing leavel of 7,103. The FTSE is now down almost 12% from that high point.

But Laith Khalaf, senior analyst at Hargreaves Lansdown has been taking a closer look and notes that behind the headline drop in the index, a high proportion of UK companies and funds have prospered over the last year.

One third of FTSE 100 companies have seen a share price rise since the index peaked and 36% of UK funds have made a positive return since the peak.

Khalaf comments:

Last April the market was riding high with the Footsie breaking new ground for the first time since 1999. Twelve months on, and the UK’s headline index has had a reality check, losing a fifth of its value from peak to trough, as commodity and banking stocks plummeted.

“It’s easy to get carried away with the twists and turns of the FTSE 100, but it’s important to bear in mind the headline index is heavily influenced by the performance of the largest stocks, so doesn’t give the full picture of how UK plc is doing.

“One third of the stocks in the Footsie have risen over the last year, though they haven’t been able to outweigh the black hole left by big oil, big mining, and big finance.”

Damien Gayle has been speaking to more shoppers on and around Oxford Street this afternoon and getting more of a sense of how UK consumers have fallen out of love with BHS.

Hayden Clottey, 23, was browsing the boutiques of Carnaby Street, close to the BHS flagship store. Asked why he wasn’t shopping in BHS, he said:

I’ve shopped there before. I used to have a friend who worked there. It’s alright, you can get pretty much everything there. It’s always a safe bet when you have to get presents for people - just the little packages of soap and things like that. I wouldn’t selectively go in there I suppose.”

Jasmin Steiner, 20, left, and Holly Hicks Holcroft, 18, out shopping around Oxford Street
Jasmin Steiner, 20, left, and Holly Hicks Holcroft, 18, out shopping around Oxford Street Photograph: Damien Gayle for the Guardian

Jasmin Steiner, 20, and Holly Hicks Holcroft, 18, were also browsing Carnaby Street’s boutiques. Asked how they felt about BHS’s financial troubles, Hicks Holcroft replied:

It doesn’t really bother me - it’s no Woolworths. Bring on change.

“ I can remember going there with my nan. It was that sort of shop that you go to with your nan and your parents.

“It’s a shame I guess but it’s making room for more stuff.”

Steiner said they had been out shopping at Monkey, a nearby boutique.

We look at everything that’s really expensive and then go to buy it
in Primark,” she laughed.

“I’ve never bought anything from there [BHS]. Maybe we will go and look when everything’s on sale, get my nan’s Christmas presents for the next five years.”

Updated

Sir Philip Green, who sold BHS to the Retail Acquisitions consortium.
Sir Philip Green, who sold BHS to the Retail Acquisitions consortium. Photograph: Paul Grover / Rex Features

Our financial editor Nils Pratley has some stern words of advice for Dominic Chappell, boss of BHS owner Retail Acquisitions, and he has some tough questions about the £571m deficit in the pension fund and the onus on previous BHS owner Sir Philip Green to sort out the mess.

Nils notes how Chappell is “crassly missing the required tone” when he writes in an email to staff: “I would like to say it has been a real pleasure working with all of you on the BHS project, one I will never forget.”

“No, Mr Chappell, BHS was never a “project” for the staff. It is how they earned their living and made plans to fund their retirement,” writes Nils.

On the pension problems, he continues:

Given the odds against the BHS “project” succeeding – there is an urgent question. How much responsibility for the £571m deficit in the pension fund lies with Sir Philip Green, who sold BHS to Chappell and his inexperienced crew for £1 a year ago.

The answer is clearly not none. The principle is clear: former owners cannot wash their hands of a pensions problem simply by selling a business for a token sum...

Prepare to dig deep, Sir Philip: forget Topshop, the yachts (a new 300-footer is on the way), the fashion academy and the knighthood. Your contribution to retailing will be remembered chiefly by the decency, or otherwise, of your behaviour towards BHS pensioners.

Read the full column here:

Usdaw union says BHS staff are "devastated"

Usdaw - the Union of Shop, Distributive and Allied Workers - has put out a statement calling for urgent talks with BHS. General secretary John Hannett has also drawn parallels with Woolworths as he urges the administrators to include workers in their decisions.

Hannett says in a statement:

“This is devastating news for the employees of BHS and we urge the company to change their attitude to trade unions and begin a dialogue with us at this difficult and worrying time.

“We also urge the administrators and the company to comply with the law, consult with staff and Usdaw as the union for BHS workers. We don’t want to see BHS staff locked out of discussions, sent to the back of the queue of creditors and treated like fixtures and fittings, as happened at Woolworths.”

“The Government needs to intervene now to protect taxpayers from picking up the bill for redundancy payments and safeguard the Pension Protection Fund.

“We are in touch with our members working in BHS to reassure them that we will provide the support, advice and representation they require.”

Shell to close three UK offices

Shell

Moving away from developments at BHS for a moment, jobs are also under threat at oil company Royal Dutch Shell.

Shell is closing three UK offices, affecting 1,600 employees, including BG’s headquarters in Reading, after its £35bn takeover of the oil and gas company earlier this year, my colleague Nick Fletcher reports.

The company has also begun a voluntary redundancy programme as part of a plan to cut 10,300 jobs across the merged group, comprising 7,500 from the original Shell business, as it attempts to cope with the recent plunge in oil prices, and another 2,800 following the merger with BG.

The Reading office will close by the end of the year and the 800 staff based there will be offered the chance to move to Shell’s central London base, which will house the entirety of the company’s south-east England operations.

Here’s Nick’s full story:

Updated

The time of that statement to parliament has shifted again, now to the slightly earlier time of 5pm

Lunchtime summary: BHS in administration

Time for a quick recap.

Britain is facing its biggest retail failure since Woolworths collapsed in 2008.

BHS, which employs 11,000 people, is now in the hands of administrators from Duff & Phelps. They have promised to keep stores open, as they seek to sell the company as a going concern.

Many analysts have warned that stores are likely to shut, with the best possibly ‘cherry-picked’ by rival retailers.

Shoppers have told us of their sadness over BHS’s demise. One lady warned that older shoppers will be disadvantaged if the brand vanishes from the high street.

Younger consumers, though, say the company simply failed to move with the times.

Business minister Anna Soubry is expected to give a statement to parliament about BHS this afternoon. It could be at 5.30pm

Former owner, the retail chief Sir Philip Green, is also in the spotlight. The FT has highlighted how he took large dividends out of the company, before eventually selling it for £1 last year.

The Pensions Regulator has reportedly opened an investigation into BHS’s pension scheme. It is currently facing a £571m black hole; Green could potentially be asked to cover some of this.

Updated

The collapse of BHS is a personal blow to Labour’s shadow chancellor, John McDonnell:

Our colleague Amelia Gentleman would like to hear from BHS staff:

Sir Philip Green’s 15-year ownership of BHS is in the spotlight today.

The Financial Times’s Alphaville site have published a handy explanation of how the Green family did rather well out of the retailer.

FT: Would 11,000 BHS workers still have jobs if Tina Green hadn’t siphoned £1bn out of the business?

Here’s a flavour:

Here, in very rough terms, is how the finances worked. It’s an open question as to whether, with a little less financial engineering, this business might yet have survived.

Green, a short man with a famous temper, acquired BHS (on behalf of his wife) for a pittance back in 2000. The store chain was in dire shape, but was conceivably worth more than he had paid. So Green booked circa £100m of ‘negative’ goodwill through the P&L, declaring BHS to be surprisingly profitable. Magic.

The parent company was then loaded with debt and the bulk of the cash was sent, via dividends, to Tina in Monaco. Precious little went into BHS, which continued to struggle....

Eventually, Green sold the group for £1. But he’d also built a retail empire with Top Shop, of course, helping to fund those super-yachts.....

Updated

Then again....

Updated

Update: business minister Anna Soubry will speak to parliament about the BHS crisis, at around 4.30pm....

Updated

BHS vouchers can still be used to part-purchase goods, reports Sky News’s Dharshini David:

We mentioned earlier that Which? have urged people to spend gift vouchers immediately, they are treated as unsecured creditors once a firm enters administration.

This is obviously hugely frustrating for people who have received vouchers - particularly if a retailer goes belly-up just after Christmas.

Insolvency trade body R3 explains why it’s a tough decision for administrators:

Accepting vouchers could:

  • Hurt other creditors by reducing the value of assets available for other creditors (by reducing stock);
  • Deter potential buyers who may not wish to take on the obligation to honour vouchers;
  • Reduce the value of an offer for the retailer given the size of the potential liability.

But not accepting vouchers could:

  • Damage the relationship between the business and its customers;
  • Damage confidence in the business among potential investors.

The government is expected to make a statement on BHS’s fall into administration in the next few hours.

It will either come from business secretary Sajid Javid, or small business minister Anna Soubry:

BHS’s headquarters
BHS’s headquarters Photograph: Damien Gayle

BHS staff look downbeat as they walk in and out of the company’s HQ this lunchtime.

Those approached by the Guardian refused to comment on the firm’s financial situation, as the administrators take control of the firm.

Meanwhile, TV cameras stood trained on the sliding doors and journalists clutching notepads shuffled to keep warm.

Updated

BHS ENTERS ADMINISTRATION

BREAKING: BHS has officially fallen into administration, and is now under the control of Duff & Phelps.

Here’s the official statement, which confirms they will keep BHS stores open while they try to sell the group as a ‘going concern’.

Philip Duffy and Benjamin Wiles, Managing Directors at Duff & Phelps have today been appointed Joint Administrators of BHS (The Group).

The Group has been undergoing restructuring and, as has been widely reported, the shareholders have been in negotiations to find a buyer for the business. These negotiations have been unsuccessful. In addition property sales have not materialised as expected in both number and value. Consequently, as a result of a lower than expected cash balance, the Group is very unlikely to meet all contractual payments.

The Directors therefore have no alternative but to put the Group into administration to protect it for all creditors. The Group will continue to trade as usual whilst the Administrators seek to sell it as a going concern. Further announcements will be made as appropriate in due course.

If you’re just tuning in, here’s our updated news story on the BHS crisis:

BHS is going into administration after failing to agree a last-minute deal to rescue the department store chain.

The collapse of the retailer, which employs 11,000 people, will be the biggest failure on the high street since the demise of Woolworths in 2008.

Staff have been told this morning that BHS has called in Duff & Phelps as administrators and should formally enter insolvency procedure today.

The formal administration will begin when it is approved by the high court, a statement from Duff & Phelps is expected shortly.

The collapse of the 88 year old BHS presents another problem for government as it attempts to save thousands of jobs in the steel industry. BHS has failed to secure emergency funding that it needed to pay wages and its rent....

Full story here:

Business secretary: BHS news is worrying

Sajid Javid, the Secretary of State for Business, Innovation & Skills, has tweeted that the government is doing its bit:

Javid has a lot on his plate - he’s already trying to avoid the loss of 4,000 jobs in the steel industry.

Having bought BHS for just £1 last year, will Retail Acquisitions end up in profit despite administration?

Sir Philip Green under pressure over pensions, and new yacht

Pension regulators could force former owner Sir Philip Green to help cover the BHS pensions black hole.

Last month, the Mail on Sunday reported that they’re considering asking Sir Philip for at least £300m to cover the £571m pension black hole.

As Nick Hood pointed out this morning, business owners can’t just sell up and abandon pensioners. And after taking an estimated £400m dividends out of BHS, Green is in the spotlight. Especially as he’s taking delivery of a new £100m superyacht - his third!

Dubbed Lionheart (the yacht, not Sir Philip), it will apparently be as long as a football pitch, and four storeys high, with all the swimming pools and jacuzzis one could ever need.

Updated

Dr Gordon Fletcher of the University of Salford says BHS has failed to keep up with retail trends, or lose its image as a Baby Boomers store.

The utilitarian model of retailing everything within one physical store simply does not appeal to younger generations and along with the soaring cost of servicing pensions the fate of this stalwart appears sealed.

Being cheap, but not cheap enough to compete, coupled with being a landmark brand while not offering anything distinctive produces that particularly bland region of retailing that BHS has increasingly occupied.

BHS cushions

Mrs Condon from Camden has emerged from BHS’s Oxford Street store carrying bulging bags.

And like Louise Simpson, she’s bought some cushions - apparently a BHS staple.

Mrs Condon tells us that the failure of BHS was tragic:

“I love that store. We don’t go down here very often, but I’ve always loved BHS. It’s got a variety of things, whatever you need it’s there for you.”

Asked what she had bought, Condon, who gave her age as in her 70s, replied:

“I wanted some cushions, some bath towels, sheets and bits and bobs you don’t need to know about.”

BHS shopper: It's a sad day

Back on Oxford Street, Louise Simpson, 40, from Wakefield is passing time with her dad, Bill Hardy, while her daughter had an interview for a place at Rada, the nearby performing arts college.

She emerged from BHS with shopping bags bulging with new living room cushions.

Asked about the business going bust, she tells Damien Gayle that:

“I think it’s quite a sad day to be honest.”

She wasn’t sure of the reasons for the business failing, but Bill, 69, cut in with “lack of customers.”

He explains:

“When you go in there there’s not many people walking around buying stuff. Back to the old saying: people haven’t got the money.”

Louise adds:

“To be honest it’s internet shopping for me. It’s age. Parents will probably just keep shopping around but we will just Google it. I think the Internet has got a lot to say for a lot of shops (which are closing down). Probably won’t be the last either.”

“I wouldn’t like to put a bet on which one will be next,” Bill added.

“It’s a shame to think that they are going under considering how long they have been going.”

Meanwhile, the Oxford Street store seemed to be attracting plenty of interest. Plenty of shoppers went through its swing doors. Few however emerged with any purchases.

Updated

Jon Copestake, retail analyst at the Economist Intelligence Unit, says BHS’s current owners have not performed well:

Having purchased the retail chain for just £1 [in March 2015], Retail Acquisitions has shown little appetite or acumen for retail management, despite its name.

Its owner Dominic Chappelle is a former racing driver with more experience of bankruptcy than retail. In addition to his hefty salary he has been involved in a number of questionable transactions, such as reportedly diverting funds borrowed by BHS to its directors while pushing landlords to accept rent reductions.

On the retail side a successful repositioning of the brand and product portfolio has not materialised and much of the company’s recent strategy has centred on selling off prime properties to keep creditors at bay.

Guardian Witness would like to hear from BHS staff, and from former workers worries about their pension:

Retail commentator Paul Mitchell sees more trouble ahead:

Updated

Older shopper: We'll suffer if BHS closes down

BHS, Oxford Street.

A 66-year-old woman from St. John’s Wood, who declined to give her name, said she always gets her clothes from BHS.

“I’m so upset!” She exclaimed when Damien asked about the shops financial troubles.

“The prices are reasonable and I just like it. Marks and Spencer are too upmarket now, all it is is business suits and business blouses and they are totally out of touch with people like me.

“I’ve just bought a swimming costume the other week. It’s £28 in here and £35 in Marks, and I got 25% off so it came down to about £10 difference. It’s things like that.

Maybe you could say BHS are probably for my age group but there’s some nice stuff for the younger generation as well.”

Today, she said, she was going in to buy sandals for a forthcoming holiday.

And she agreed that BHS’s demise would be the end of a British institution.

“I think it’s a real, real shame because to me John Lewis and Debenhams are too expensive now. Primark’s quality is not that great, plus they are more for the younger generation.

There’s not many shops now that cater for the older woman.”

Updated

BHS’s owner has confirmed that the administrators have arrived, reports Ben Martin of the Telegraph:

The press are gathering on Oxford Street....

This is why BHS has struggled to find new funding:

BHS shopper: It's all gone a bit wrong

Andri Antoniades, 59, from Cyprus, and her husband are browsing the Oxford Street shops during a holiday to London.

They already know about BHS’s problems. And speaking to Damien Gayle, they raised the topic of Philip Green’s £1.2bn dividend [from his Arcadia empire in 2005] and his subsequent sale of the business for £1 last year.

Andri said:

“It doesn’t look good and this is what happens at the end of the day.

He brought in a famous model [Caprice] he was trying to upmarket the look, but obviously it’s gone a bit wrong.”

The Antoniades didn’t plan to buy anything from BHS, just take a look.

Her husband broke in with a smile:

“We’ve just come to see it before it collapsed!”

Andri added:

“It’s nice to be able to say I was there...”

Updated

BHS customer: Stores are stuck in the 90s

Nicolette Kadzeya, 39, was waiting with her three children outside BHS’s store on Oxford Street when it opened.

She believes the company has failed to keep pace with the changing times, my colleague Damien Gayle reports:

Kadzeya had read about the firms’s problems but hoped it would open because she had to exchange an unwanted item

“I think the problem with BHS is that this branch is very up to date but if you go to the branch in Surrey Quays it’s as if you have gone back in time. It’s like you’ve gone back to the mid-90s.

“Some of the branches which are outside of London are not that well maintained. It’s a bit old fashioned as well. They are good for school shoes but it’s not really up to date.”

She couldn’t talk for long though....

“I think they are open so I have to make it fast,” Kadzeya said as she wheeled her buggy inside.

Updated

BHS’s store in Oxford Street doesn’t look terribly busy, but at least it’s open for business this morning:

It's official, BHS is entering administration

A BHS spokesperson has confirmed that the administration process is underway:

BHS’s social media team are doing their best to remain upbeat today, and ready to help:

Customers are showing their support too:

Updated

We’re expecting BHS to file for administration as soon as the UK courts are open for business:

German business confidence misses forecasts

Newsflash: German business confidence is weaker than expected, according to the latest survey from the IFO thinktank.

IFO’s business confidence reading has dipped to 106.6, from 106.7 last month, with firms reporting that conditions have become tougher.

Updated

Which: Spend your BHS vouchers now

Anyone holding BHS gift vouchers should spend them right now, says Alex Neill, head of campaigns at consumer group Which.

She points out that administrators are not obliged to accept gift vouchers - even though the company has already received the monay for them.

Which explains:

When a company goes into administration the administrators get certain powers to help turn the company around.

These powers enable them to refuse to accept vouchers if they consider this is in the best interests of the company.

Keep an eye on the administration progresses as the administrators may initially decide not to take vouchers and then later decide they will.

The crisis at BHS highlights wider problems in the retail sector , argues Joe Rundle, head of trading at ETX Capital.

It’s not just BHS that’s suffering - shares are down sector-wide over the last 12 months – reflecting investor caution about an industry that’s increasingly dependent on cheap credit and little else to drive it.

The concern is that if interest rates rise – which they will have to do sooner or later - consumers will quickly tighten their belts and dispense with their credit cards.

Meanwhile, retailers’ margins are being squeezed by the new living wage, which is driving up wage costs when there is little sign of meaningful sales price growth.

BHS may have been another Woolworths that struggled to adapt to the new retail world. But the same pressures that squeezed the life out of BHS are being felt across the UK retail sector today.

Trouble on the high street is usually a sign of more deep-seated problems in the UK’s economy.”

Austin Reed, another high street name, went into administration last week too, despite the patronage of IMF chief Christine Lagarde....

BHS staff are due to learn at 11am that their jobs are at “very high risk” after efforts to create a rescue deal over the weekend failed, says the BBS’s Simon Jack.

Administrators Duff & Phelps are lined up to take control, and will try to sell BHS as a going concern. That will be tough, though, as the company needs £100m of fresh funding.

BHS is paying the price for not keeping track with its customers’ changing needs, says Phil Dorrell, Partner, Retail Remedy retail consultants.

Dorrell agrees that the company’s better stores will be ‘cherry-picked’:

When the administrators are called in, there won’t be a retailer to buy BHS wholesale.

Expect a piecemeal sale of specific sites in strategic locations to John Lewis possibly or Sports Direct or Next.

Sadly this is probably the beginning of the end for BHS on our High Streets. It would take a brave and innovative business to buy the brand and turn it into an ongoing concern.

BHS can trace its history back to 1928, when it was created as a British rival to Woolworths.

It floated five years later, spending 65 years on the stock market until retail magnate Philip Green took it over in 2000.

Our BHS timeline has the details:

Updated

BHS's pensions woes....

Nick Hood adds that BHS’s profitable stores will probably cherry-picked, perhaps by Sports Direct.

That would save some jobs, but as he tells the Today Programme:

Ultimately, we’ve got 11,000 jobs at risk here and the pensions of 20,000 people. It’s a disaster.

The pension fund currently faces a £576m deficit, but that would ‘escalate’ if BHS fails and the deficit is “crystallised”.

Q: Could they go after Philip Green, the former owner of BHS, who sold BHS for a pound last year?

Pension liabilities are like Hotel California, Hood says, you can check out but never leave.

The Pension Protection Fund will be looking very closely, and could issue a contribution notice to people who have been connected with the fund, Hood adds.

The initial offer I believe Sir Philip made of £40m, plus a £40m loan on top, won’t cut the mustard.

Inevitably, a much higher contribution will be required.

Updated

BHS crisis has "awful echoes" of Woolworths' demise

BHS’s options are “distinctly limited” as it totters on the brink of administration, warns Nick Hood, business risk adviser at the insolvency practitioners Opus.

Speaking on the Today Programe, Hood says BHS has suffered from years of serious underinvestment, and lost over £400m over the last six years.

Retail these days is all about heavy investment in staying up with the trend, online offerings, mobile offerings. None of this has happened at BHS.

This has awful exchoes of what you and I were discussing in 2008 over the demise of Woolworths. Another retail business that hasn’t stayed up with the times.

Updated

A British Home Stores (BHS) in Cambridge.

One of Britain’s longest-running retail chains is on the brink of collapse.

It’s almost 90 years since British Home Stores was founded. And BHS could fall into administration this morning, as hopes of a last-minute deal with Mike Ashley’s Sports Direct fade.

With 11,000 jobs at risk, plus the pensions of tens of thousands of former workers, it could be the biggest retail failure since Woolworths eight years

My colleague Graham Ruddick explains:

BHS has failed to secure emergency funding that it needed to pay wages and its rent. The restructuring firm Duff & Phelps is set to be appointed as administrators on Monday, unless £60m can be found to keep BHS afloat in the short term.

Darren Topp, the chief executive of BHS, said: “What was on the table wasn’t sufficient and we have been working in the last few days to fill the gap.”

Updated

Pound hits 5-week high after Obama's Brexit warning

The pound vs the US dollar
The pound vs the US dollar Photograph: Thomson Reuters

The pound has hit its highest level since early March this morning, after President Barack Obama made his dramatic intervention into the EU referendum debate.

Sterling jumped by more than half a cent in early trading against the US dollar, hitting $1.4475 for the first time in five weeks.

Obama’s warnings against Brexit have enraged the “Out campaign”, but traders are calculating that they could sway undecided voters ahead of the June 23 referendum.

On Friday night, the US president insisted that Britain would be at the “back of the queue” to arrange a trade deal with America. Later he said it could take a decade - comments reiterated by Democratic frontrunner Hillary Clinton.

Economists expect the pound to slump if the public do vote to leave the EU, so today’s move suggests the Remain camp are on the front foot.

Michael Hewson of CMC Markets explains:

The pound was among one of the best performing currencies last week and has continued to rally this morning against the US dollar and euro as markets perceive that the recent intervention by US President Obama, as well as his possible successor Hillary Clinton has shifted the odds towards the “Stay “ camp in the latest polling indicators, dealing a blow to “Brexit” campaigners.

The Agenda: Markets mixed ahead of German IFO report

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Traders are bracing for a busy week, with new growth data from Britain (on Wednesday), the US (Thursday) and the eurozone (on Friday).

Both the eurozone and the UK are expected to have grown by just 0.4% during the first quarter of 2016, due to domestic weaknesses and the slowdown in emerging markets.

And America might do even worse, with quarterly growth of just 0.15% expected.

This morning, new German business confidence figure are released at 9am BST, by the IFO thinktank.

It’s expected to show a small improvement in business expectations, from 106.7 to 107.1.

Then we get a new healthcheck on Britain’s industrial sector at 11am, from the CBI.

Europe’s stock markets are expected to open mixed, after falling around 1% on Friday

Updated

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