BHS is asking landlords for space so that it can focus on transforming itself for a future in multichannel retailing.
The well-known UK high street retailer, which sells online via bhs.co.uk and is a Leading retailer in the IRUK Top500 research, has put forward proposals for a company voluntary arrangement (CVA) that would see it cut its rent payments as part of a larger turnaround plan aimed to better equip it for the future.
The proposals come almost a year after Arcadia Group sold BHS to Retail Acquisitions for a reported £1. At the time, Retail Acquisitions chairman Keith Smith said this was a “fantastic opportunity to breathe new life into this iconic British high street brand,” which then had 171 stores.
BHS is advised by Will Wright, restructuring partner at KPMG and proposed supervisor of the CVA. He said: “For almost 90 years, BHS has been one of the most iconic brands on the UK high street, but in recent years has seen its profitability decline as it has sought to respond to changing customer behaviours, increased competition and the rise in omnichannel retailing.”
‘Onerous lease arrangements’
Its new proposals, described by Wright as “one facet of a wider turnaround plan,” are intended to tackle a key fixed cost at the business – the “onerous lease arrangements across its UK-wide store portfolio”.
He says that some of its 164 stores are rented on “unsustainable” leases, that were originally negotiated decades ago. BHS is proposing to continue paying the full rent at its 77 most viable stores, but to reduce rents at other properties to between 75% and 25% of the total.
“With the support of its lenders, shareholders and landlords, the company will be able to reshape its debt and operational structure to a model more suited to today’s multi-channel retail environment,” said Wright.
BHS needs at least 75% creditor approval for the CVAs to go ahead.