Monday, March 7, 2016

News: Rotherham BHS store on closure list


The Rotherham store of national retailer, BHS is under the threat of closure as the owners set out part of a wider turnaround plan that addresses the leases of its retail sites.

BHS Group Ltd was acquired by Retail Acquisitions Ltd in March 2015 from the Acardia group. The department store operates some 164 outlets in the UK and was acquired by Sir Philip Green's Arcadia in May 2000.

In the same month it denied that a list of 52 stores were those being considered for disposal. The list included BHS stores at Parkgate Shopping in Rotherham and at Meadowhall in Sheffield.

Working with restructuring professionals at KPMG, the owners have announced details of a proposed company voluntary arrangement (CVA).

A CVA is often used by insolvent companies to negotiate new payment terms or periods with its creditors, in this case, the rent on retail property. However, the CVA must be agreed by all creditors (the landlords) for it to be put in place.

The CVA proposal divides BHS's 164 store portfolio into three main categories, based on the commercial viability and strategic importance of each site.

77 are considered its "most viable" stores, with proposals to pay rents monthly as opposed to quarterly. 47 premises have been deemed viable if a reduction in rent is obtained (of up to 75%).

Stores at Parkgate and Meadowhall are deemed amongst the remaining 40 locations that will continue to trade for a period of a minimum of ten months whilst negotiations with landlords are undertaken to reduce the rents substantially. Considered unviable, a reduced equivalent monthly rent of 25% is proposed to be paid for a minimum of ten months.

It is hoped that where rent reductions are achieved, these stores will remain open and that the store closure number will be kept to a minimum.

Will Wright, restructuring partner at KPMG and proposed supervisor of the CVA, 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 omni-channel retailing.

"While the company's store estate is located across favourable retail locations, a number of these leases are unsustainable, predicated on terms which were originally negotiated some decades ago. 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."

BHS website

Images: Parkgate Shopping


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