Buying a big business for £1 sounds like a pretty good deal, but when it's one with the pensions deficit and poor performance of BHS you'll still have to work really hard to make even that investment pay off. Presumably with that in mind, the department store's new owners have already kicked off a major review of its store estate, just days after taking it off Sir Phillip Green's hands.
Retail Acquisitions, which was set up by a number of unnamed investors to buy BHS, has reportedly circulated a list of 52 stores to property firms, suggesting it plans to close or sell a large number of them. That's almost one third of the chain's 171 shops, and Retail Acquisitions has already confirmed it will close its stores at Fosse Park and in Oxford 'in the coming months'.
When he announced the deal last week, Green insisted that one of his big priorities when identifying a buyer was that it was focused on returning the business to profit, rather than stripping it of its assets. Retail Acquisitions insists that's the case, and that appointing consultants doesn't mean that all 52 stores face the chop.
'As with any new owner, Retail Acquisitions, together with BHS management, is looking at options for the property portfolio and its structure,' a spokesperson said. 'Property consultants have been appointed, but this does not mean that any leases that may be under review will be sold, and certainly does not mean that store closure is the only option.'
Other possibilities include renegotiation of contracts and subletting unused space, it said. Still, that use of the phrase 'only option' doesn't exactly inspire confidence. Retail Acquisitions certainly has a fight on its hands to turn things around. Some would argue the BHS brand is blander than a bread sandwich, and it's place in the market isn't clear anymore.
'At its height, BHS was the poor man’s M&S,' Richard Hyman, an independent retail analyst told the FT last week. 'It was for people who liked M&S, but couldn’t quite afford it The problem is that that market does not exist any more. It doesn’t exist for M&S. That market has actually moved lots of notches down, towards Primark.'
At a time when the spoils are going to the posh and the discount ends of the market, the distinctly middle-of-the-road BHS needs to find a new niche.