HIGH streets across Yorkshire could be in for another overhaul and up to 1,000 staff in the region could lose their jobs following the collapse of retailer BHS.
Staff at the 14 Yorkshire stores were told yesterday that negotiations to find a buyer for the struggling retailer had been unsuccessful.
BHS, which began as a budget store in south London in 1928, has debts of more than £1.3bn, including a pension fund deficit of £571m, which proved a major stumbling block in last-ditch rescue talks over the weekend.
The collapse represents the biggest high street failure since Woolworths, which went bust eight years ago.
While administrators Duff & Phelps say it is seeking to sell it as a going concern, it is widely expected that some of the stores, which include two in Leeds and two in York, could be sold off piecemeal to rival retailers eager to secure prime city locations.
The chain was bought last year by consortium Retail Acquisitions, headed by former racing driver Dominic Chappell, for £1 from Sir Philip Green, the owner of the Arcadia retail empire.
Sir Philip, who bought BHS for £200m 16 years ago, is reported to have offered £80m towards the cost of BHS pensions, though the regulator could still pursue further money from the billionaire.
Rival retailer Sports Direct is understood to want to some of BHS’s 164 stores, which employ 11,000 people, but will only do so if it does not have to take on any pension liabilities.
It is thought that up to 30 other retailers may look to buy either a slimmed-down version of the business or pick over its store estate. However, experts warned that it was “unlikely” a buyer for the business in its current form would be found.
Julie Palmer, partner at insolvency firm Begbies Traynor, said: “As an under-performing brand that simply hasn’t kept up with the pace of change in the retail sector and requires major investment, it looks increasingly unlikely that any buyer will be brave enough to salvage the business in anything like its current form.”
The president of Leeds Chamber of Commerce, Gerald Jennings, said while it was “disappointing” to hear of major redundancies, the retail sector “is dynamic”.
“As many of the stores occupy prime retail locations, especially in Leeds, I expect there will be interest in many of the store locations as going concerns,” he said.
Mr Chappell, said he will continue to work with the administrators to “find a solution post the administration”, and said “no-one is to blame” for the collapse.
The Pensions Regulator has launched a probe into the business, and said it wants to make sure that it meets as much of its obligations as possible.
Shopworkers union Usdaw has urged the company to “change its attitude” and talk to unions.
General Secretary John Hannett said: “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 Woolworth’s. The Government needs to intervene now to protect taxpayers from picking up the bill for redundancy payments and safeguarding the Pension Protection Fund.”
WHAT ARE BHS OPTIONS?
• A buy-out
Talks are continuing with Sports Direct with discussions centring on a plan for the budget activewear chain to buy some of BHS’s 164 stores. But it is understood the company would only buy the shops if it did not have to take on its £571 million pension deficit, according to the BBC. Sources close to the negotiations told the Financial Times that a deal going through was highly unlikely.
• Rescue Package
Retail Acquisitions bought the company in 2015 for £1 from Topshop owner Sir Philip Green. The new owner planned to deliver £160 million of funding but have not been able to find the money, the BBC said. The chain had success when a reduction of rents was negotiated with landlords across the country and the owners also tried to find more funds through property sales, including their Oxford Street lease, but even this did not make as much money as had been hoped. A last-minute loan could help the ailing firm.
What will happen if it goes into administration?
• Administration would put around 11,000 - 8,000 employees and another 3,000 contractors - at risk.
The restructuring firm Duff and Phelps has been rumoured as administrator for BHS should neither of the rescue options materialise, will likely try and find a buyer for BHS as a going concern.
What will happen to the firm’s problematic pension deficit?
• The creditor rights to the fund were passed onto the government-backed Pension Protection Fund (PPF), an organisation that safeguards pension scheme members if their employer becomes insolvent, in March. Administration would probably mean the pension scheme is bailed out by the PPF.
When will staff get more information?
• If the retailer does go into administration, staff will be told about the collapse at a meeting at 11am on Monday, according to The Guardian. A statement posted on the BHS website on Friday insisted that the company is not in administration nor has it applied to be and that the website is operating “as usual”.
TIMELINE: HOW BHS LOST OUT TO RIVALS
BHS is one of the UK’s most recognised high street brands but it has struggled against value fashion rivals and online shopping.
By 2016 the BHS Group was performing on average 1,000,000 transactions a week across 164 stores and 74 franchise stores across 18 countries - but it is struggling to be profitable.
• 1928 British Home Stores is set up in a store in Brixton, south London. Nothing costs more than a shilling.
• 1929 Prices rise to a five shilling maximum as home furnishings are introduced.
• 1970 Expansion since the Second World War means the brand now has 94 UK stores and around 12,000 workers.
• 2000 Sir Philip Green buys British Home Stores for £200 million. It is rebranded as BHS.
• 2002 BHS becomes part of Arcadia when Sir Philip pays £840 million for the clothing chain which includes Topshop, Dorothy Perkins and Burton.
• 2005 The shop is beginning to lose pace as it is pitched against cheaper rivals such Primark.
• 2014 BHS department stores start selling food with the aim is for it to be about 10% cheaper on branded goods than the big four supermarkets who are already involved in a price war.
BHS, which has 171 stores, made a cash loss of £21 million in the year to August 2014, compared with £19.3 million in the year earlier, the Financial Times reports.
• 2015 Soon after the retailer was bought by Retail Acquisitions Limited RAL for £1 in March 2015 work began on a turnaround plan to try and bring it back into profitability. BHS employs 11,000 people and has a pension deficit of about £100 million, the FT reports.
The store is thrown a lifeline in March when creditors back two company voluntary arrangements (CVA) designed to cut costs and prevent widespread store closures.
Weeks later BHS issues a statement saying it “would like to advise that despite some press speculation it is not in, nor has applied to go into administration” but within days fears deepen that it may go into administration by April 25, threatening 11,000 jobs.