Jun 2, 2016
British retailer BHS to close with thousands of job losses
Jun 2, 2016
British department stores group BHS is to be wound down after administrators failed to find a buyer for the 88-year-old chain, threatening over 10,000 jobs and creating huge vacant sites in town centres struggling to cope with changing shopping habits.
The failure to find a buyer will likely increase the focus on previous owner, billionaire Philip Green, who sold the chain to a group of little-known investors led by a previous bankrupt called Dominic Chappell for one pound in March 2015.
All of BHS's 163 stores will hold closing-down sales over coming weeks and 8,000 staff are likely to be laid off, advisers Duff & Phelps said on Thursday. Another 3,000 workers not directly employed by BHS are also at risk.
The chain, which once targeted a similar mid-market customer as bigger rival Mark & Spencer, failed to keep pace with changes including the rise of cheaper, more fashionable stores like Primark and online competition.
"The British high street is changing and in these turbulent times for retailers, BHS has fallen as another victim of the seismic shifts we are seeing," said administrator Philip Duffy after BHS became the latest casualty of a tough market which already this week claimed tailoring chain Austin Reed.
Its closure, one of the biggest failures in the UK retail sector since Woolworths in 2008, came after none of the multiple offers for the business were able to complete a deal due to the working capital required to secure the company's future, administrators added.
Up to 10 bidders were reported to have been interested in rescuing the stores, including Mike Ashley, owner of Sports Direct, who had said he was in talks before administrators were called in.
Green had paid 200 million pounds ($289 million) for BHS in 2000, and he took about 400 million pounds in dividends in the early years of ownership, according to company accounts.
But the business had been loss-making for seven years when it was sold and it has a deficit in its pension fund of more than 500 million pounds.
"Sir Philip is saddened and disappointed by the news and had hoped that the business would be sold as a going concern," a spokesman said.
The British government said the failure to rescue the business was devastating news for all those that work at BHS.
Business Minister Anna Soubry said the government had already announced an accelerated Insolvency Service investigation into the activity of former BHS directors.
"Any issues of misconduct will be taken extremely seriously," Soubry said.
The pensions regulator is also investigating whether Green's Arcadia Group sought to avoid its responsibilities in the deal, and should be pursued for a contribution to make good BHS's 571 million pound pension deficit.
Green is also due to be questioned on June 15 by British legislators on the Work & Pensions and Business Committees. "The staff will want answers about how things went so badly wrong on his watch," the opposition Labour party said in a statement.
Chappell is also set to be interviewed by the same joint committee.
($1 = 0.6921 pounds)
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