Tue, 09 Feb 2016 | ADMINISTRATION
BHS is considering placing parts of the company into a form of insolvency, as the distressed business seeks to renegotiate the terms of leases at around 30 of its UK stores.
In an attempt to turn the business around, BHS owner Retail Acquisitions have brought in KPMG over the last couple of weeks to advise on its options and is now considering closing several of its 160-plus stores across the UK, many of which the retailer says cost several times the market rate.
Landlords have since been told that Retail Acquisitions may use company voluntary arrangements (CVAs) to cut costs. However, using a CVA would be seen as a controversial move, as it involves asking landlords to elect to receive a lower rent as a measure to prevent store closures.
BHS was bought by Retail Acquisitions from Sir Philip Green last year for £1. The new owner has already closed six stores in an attempt to turn the British business around, but now it looks likely that further store closures will follow, as the retailer aims to significantly cut costs and deal with a pensions deficit of more than £200 million.
The number one method to reduce costs according to KPMG involves renegotiating the amount of rent that BHS pays on a portfolio of some 30 stores across the country, including one store in the north of England, which the retailer is claiming costs four times the market rate.
A spokesman for the company stated: “BHS has stated publicly many times since the acquisition that it would like to take steps to address a number of unprofitable stores. This may involve discussions with some landlords and KPMG will help us in this process.
“Our turnaround plan is still in its first year. Although we still have a long way to go, we are entirely confident that we will regain our place as an iconic British high street brand.”
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