In its fifty years, MT has charted the decline of many businesses. Often, there’s a tendency to assume that big names will shrug off their reputational maladies or bottom line bugs. But you only need to look at how many former giants of the FTSE 100 are no longer around to realise that even the strongest of firms can perish when times get tough.
They certainly have been tough for BHS. Stuck in a disappearing middle between M&S and Primark, it suffered sufficiently for owner Philip Green to sell it for £1 last year. The buyers, a group of financiers going by the name Retail Acquisitions, have been trying to turn it around, but so far to little avail. BHS is still loss-making, and has over £1.3bn of debts, much of which coming in the form of a pensions deficit.
However a chink of light may just have appeared at the end of the tunnel - Retail Acquisitions presented a company voluntary agreement (CVA) proposal to BHS’s creditors and landlords this morning, propsing to cut rents by more than half in a majority of BHS’s 164 stores. And it's just been voted through.
The deal will result in 47 of BHS' stores having their rent cut by as much as half, while a further 40 stores will pay just 20% of their current amount. Will it work? Commercial landlords aren't excatly well-known for their generosity but it seems that they have decided, sensibly enough, that it’s better to have reduced rents than vacant properties. Prime high street locations of that size don’t exactly get snapped up at the drop of a hat after all.
But it's a short term fix at best. The company has already said it needs to raise another £100m to keep trading after March 25, by selling properties and debt restructuring. This CVA agreement enables that process to go ahead, but it's now up to Retail Acqusitions to raise the capital and get punters through the door and spending again
There are grounds for optimism though - it's measure of how much everyone wants the BHS recovery to succeed that the deal has been struck in the first place. No landlord would accept half price rents as anything other than a emergency measure.
What this really comes down to then is faith. The creditors and landlords have demonstrated that they have enough faith in BHS’s new management to give them a chance to rehabilitate the brand, reinvigorate the strategy and save 10,000 jobs. Now it's up to BHS chief exec Darren Topp and his team to restore shoppers faith in the ailing brand, and sharpish.