BHS today won backing from its landlords, enabling it to 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, had 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. Today it won the backing of at least 75% of its landlords.
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 ‘supervisor’ of the CVAs. He said: “Today’s ‘yes’ votes enable BHS to tackle the issue of an unsustainable lease burden which was weighing heavily on the business. While together, the two CVAs comprise only one element of BHS’s plan to turn around its fortunes, they are a critical cog in the mechanism that will put the business in a stronger operational position. The proposal process has given both the company and its creditors the opportunity to agree a compromise that is mutually acceptable.”
The proposals, previously 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”.
Wright says that some of its 164 stores are rented on “unsustainable” leases, that were originally negotiated decades ago. BHS will now continue paying the full rent at its 77 most viable stores, but 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,” Wright said at the time the CVA was proposed.
