BHS has appointed Philip Duffy and Benjamin Wiles, managing directors of Duff & Phelps, as joint administrators after attempts to find a buyer for the ailing department store chain failed.
Property sales have not materialised as expected, both in number and value, they said.
“Consequently, as a result of a lower than expected cash balance, the group is very unlikely to meet all contractual payments,” said Duff & Phelps. “The directors therefore have no alternative but to put the group into administration to protect it for all creditors.
”The group will continue to trade as usual whilst the administrators seek to sell it as a going concern. Further announcements will be made as appropriate in due course.”
BHS owner Retail Acquisitions “has always been the issue”, a source close to the situation told Drapers this morning.
Dominic Chappell, who was paid a salary of £540,000, owns 90% of Retail Acquisitions, while Mark Tasker and Stephen Bourne both own 5%, although they are understood not to be involved with the business.
“The sad thing is that if the management was left to run it themselves, with Retail Acquisitions raising the relevant funding that they promised, it wouldn’t have gone this way,” the source said. “Darren [Topp, chief executive of BHS] spent too much time managing up not managing down.”
It is thought BHS will now be sold off piecemeal on a store-by-store basis, as in the case of Sports Direct’s acquisition of the Sunderland store for £2m.
However, the source suggested that there are around 100 stores that could be run viably if they could be plugged into an existing business with head office functions and logistics infrastructure.
“You wouldn’t need to add much to it to make that work,” said the source. “There are one million transactions going through BHS each week and there is value in the brand, particularly in secondary or tertiary towns.
“Sports Direct has been interested and there are potentially other suitors. I expect [South African retail group] Pepkor will have a look at it – they’d love some big stores and the volume it would give them would be interesting, they could also immediately reassure suppliers so there would be synergy there.”
Since the Retail Acquisition deal in March last year, the BHS management team has been working on who its customer is and what they want, as well as separating its functions from Arcadia Group. Arcadia boss Sir Philip Green sold the 88-year-old chain to Retail Acquisitions for £1 last March.
A new finance system was set to be installed in in May and a new, responsive online platform was set to go live in July.
House of Fraser’s brand marketing director Tony Holdway joined BHS as marketing and creative director in February to work on new marketing initiatives that were set to launch in the second half of this year.
There have been calls for the government to step in to save jobs but this is thought to be unlikely.
Business secretary Sajid Javid said on Twitter: “Worrying news for BHS workers this morning. [The] government is in close contact with the company’s management at this difficult time.”
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