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BHS credit risk worries fashion suppliers

The new chief executive of BHS has unveiled plans to turn around the troubled department store chain by expanding its food offer, but fashion suppliers have been left in the dark over its credit cover woes.

It emerged this week that BHS had its credit insurance withdrawn in January, which had a knock-on effect on orders for the next four months and beyond.

A spokesman said: “After talking through our business plan with insurers, including EBITDA, the situation is improving and has not stopped us placing or receiving orders.”

However, sources told Drapers credit insurance continues to be a problem. One BHS womenswear supplier said: “Those that rely on credit cover will walk away, but some will take the risk because as a supplier it is very difficult to open new accounts nowadays – it is a gamble whichever way you look at it.

“However, they are trading as normal and have been behaving properly and paying bills since Retail Acquisitions took over, which seems to be a good sign.”

A former menswear supplier said: “We stopped supplying them about a year ago because they didn’t seem to know who their customer is and now we wouldn’t be able to get credit insurance to supply them again because it’s a new company, so we have to walk away.

“With the Bank and Republic situation, it is a case of how many times do you want to get hit?”

Another industry source said credit insurance is easily given and taken away, but added: “It is a massive inconvenience as it affects the ability to recover the debt. And looking at BHS specifically, this could amplify wider problems in the business.”

It comes as BHS unveiled its latest plans to restore confidence by expanding its convenience food offering to 20 more stores and upgrading its cafes and restaurants.

The chain has signed a deal with food service company Compass group, which will take over operation of its cafes and restaurants, and food wholesaler Booker Group to roll out its current food retail trials in Romford, Staines and Warrington, leading to the creation of 250 new jobs.

It is expected to unveil further deals over the coming weeks.

Darren Topp, who was appointed as chief executive on March 17 shortly after Retail Acquisitions acquired control from Arcadia owner Sir Philip Green for £1, said: “These two strategic deals mark the start of a new journey for BHS.

“We aim to surprise consumers with an expanded range of products and services and to return this iconic and very British brand to the hearts of people across the country.

“This frees up my team to focus on what we do best: sourcing and selling great home products and clothing at great prices, while allowing BHS to expand into the new areas.”

@Tara_Hounslea

Readers' comments (1)

  • Pricing and clothing quality must be a key focus. Who is Bhs' target market? Your average 40-45 old mother with kids isn't going to Bhs. Your in vogue 50+ customers aren't going to Bhs. Unfortunately, until Bhs keenly identify who they are targeting, customers will still go to other retailers. Sorry to say, Bhs is struggling to be a destination store..it's more of a chance purchase store, especially if the high street retail options are limited. Customers want style at a good price. Come on Bhs. Bring home and style to the high street once again.

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