BHS collapses into administration an inevitable outcome

Mon, 25 Apr 2016 | ADMINISTRATION

The owner of retail chain BHS has written to members of staff to inform them that the distressed business has gone into administration following failed attempts to stay afloat.

BHS, which was acquired only last year for £1 by Dominic Chappell and his Retail Acquisitions consortium, is the largest high street collapse since Woolworths folded in 2008. It follows failed talks with fellow retailer Sports Direct about buying some of its 164 stores in the UK.

Chief among the reasons cited are a large rent bill, which the embattled retailer fought with a company voluntary agreement (CVA), and a massive pensions deficit of £571 million, which was inherited from previous owner Sir Philip Green.

Mr Chappell told BHS’s 11,000 staff: “It is with a deep heart that I have to report, despite a massive effort from the team, we have been unable to secure a funder or a trade sale.”

“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, you all need to keep you heads held high, you have done a great job and remember that it was always going to be very, very hard to turn around.”

Duff & Phelps have been named as administrators, with finding a buyer for the business the top priority. Staff wages for the rest of April will be paid by the administrators, according to Mr Chappell.

According to Harsha Wickremasinghe, Associate at Livingstone Partners, the BHS business model itself lies at the root of a problem.

"Its relevance to the current market is unclear – in terms of product range, brand appeal and distribution strategy. These structural weaknesses, coupled with soaring rents, high business rates and pension liabilities, alongside the impact of the National Living Wage, gave BHS little room to manoeuvre." says Wickremasinghe.

"BHS has been a ‘problem-child’ of the department store sector for some time and has simply failed to move with the times. Its offer lacked any clarity, the brand mainly traded off of its legacy and it engaged in a series of increasingly desperate measures to prolong its existence – the move into selling food probably being the best example of this. Whilst rivals such as Debenhams, House of Fraser and John Lewis have all invested heavily in developing their ranges, multichannel capabilities and heavily-refurbishing their stores, BHS was left dangerously exposed. Its woes were further compounded by other more focused retailers, such as Primark, chipping away at its soft underbelly – to devastating effect."

"Whilst it is sad to see a retailer of BHS’ scale collapse, particularly when it concerns its employees, few will be sorry to see the brand disappear from the UK’s super-competitive retail landscape."

For more information, see the guide: Buying liquidated assets an attractive option.


Share this article



Latest Businesses for Sale

IT Infrastructure Service Provider
North West, UK

Solutions are offered on-site or hosted in the cloud, with the company delivering robust and reliable infrastructure environments, upon which its clients and partners can rely. Services include hosting and IT, with a complementary range of products a...

Asking Price: Offers Invited
Turnover: £763,000

LEASEHOLD


Freight Forwarding Company via Road, Air & Sea
UK Wide

Benefits from a knowledgeable, approachable and loyal workforce, capable of running the business without the shareholders’ input. Operates from leasehold premises. Our clients are offering the business for sale to pursue other, unrelated interests. O...

Asking Price: Offers Invited
Turnover: £1,500,000

LEASEHOLD


Homeware Products in Kitchenware for Mass-Market Retailers
South of England, UK Wide

Provides an extensive range of 900 products, many of which as an exclusive distributor, owing to its strong relationships with suppliers. Operates from leasehold premises based in South England. Offers invited.

Asking Price: Offers Invited
Turnover: £6,000,000

LEASEHOLD



View more businesses for sale

News Search

Latest News

 
20
 
Nov
 

Swindon waste-to-gas plant construction to resume after administration | ADMINISTRATION

An unfinished waste-to-gas facility in Swindon has secured &...

 
19
 
Nov
 

UK government set to approve Cobham takeover | BUSINESS SALE

The British government is poised to approve the $5 billion t...

 
18
 
Nov
 

Kitwave acquires Alpine Fine Foods | BUSINESS SALE

Independent wholesaler Kitwave has acquired Alpine Fine Food...

Free guide: 10 Biggest Buyer Mistakes

Sign up to receive our acquisition alert emails to get your FREE guide

Email


Related News

 
29
 
Sep
 

BHS 'reborn' as online only business, BHS digital | ADMINISTRATION

British Home Stores (BHS), which was wound down in June, is ...

 
03
 
Jun
 

BHS faces liquidation as rescue bids fail | BUSINESS SALE

BHS faces going into liquidation after administrators Duff &...

 
26
 
May
 

Pretty Polly tights firm enters administration after BHS collapse | ADMINISTRATION

The Derbyshire-based manufacturer of Pretty Polly tights has...

Want access to the latest businesses for sale?

Business Sale Report is your complete solution to finding great acquisition opportunities.

Join today to receive:

  • Comprehensive range of businesses for sale
  • Make direct contact with business sellers or their intermediaries
  • Access to all UK administrations, liquidations and winding-up petitions
  • Daily email alerts for the latest businesses for sale & distressed notifications
  • Business Sale Report publication posted to you every month
  • Advertise your acquisition requirements on our "business wanted" section

All this and much more, including the latest M&A news and exclusive resources