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Memo from Musgrave: Two British names propped up by their property

Two longstanding names that are trying to justify their respective places in the modern retail world – BHS and Austin Reed – have been in the news over the past week for less than uplifting reasons.

BHS, we have learned, is trying to raise upwards of £65m to keep itself afloat as the complex ties to its previous owner, Arcadia, are unravelled.

Any entity wishing to lend to the unhappy chain will no doubt want to secure its money against a BHS asset. The only assets available appear to be some of its 171 stores, which suggests there is something in the rumour that the whole sorry saga of the detachment from Arcadia is linked to some convoluted property play.

Much as I would be delighted to be proved wrong, I get the distinct feeling that the former British Home Stores is not long for this world.

As is well known, suppliers cannot get insurance against the business, so they either do not want to deal with it or will insist on being paid up front by letter of credit, thereby negatively affecting the chain’s cash flow.

“I was struck that the BHS unit near Oxford Circus was one of the few stores in the vicinity that was still awash with bright red Sale signs”

Walking down London’s Oxford Street a week or so ago, I was struck that the BHS unit near Oxford Circus was one of the few stores in the vicinity that was still awash with bright red Sale signs.

Trade gossip suggests that, by its own dismal standards, BHS is trading quite well at present – the British customer does like a discount, after all – but it is going to be along hard slog across the autumn months for Retail Acquisitions, the mysterious entity that acquired this tarnished retail veteran for £1 from Sir Philip Green’s Arcadia in March.

Depending on how well or otherwise it performs from now until Christmas, I would not be totally astonished to see BHS as the first retail casualty of 2016.

It is a well-worn strategy for a limping business to rake in whatever cash it can during the Christmas bunfight before calling in the administrators.

Were that to happen to BHS – and I hope for the sake of its 11,000 employees and its under-funded pensioners it does not come to pass – then the property carve-up could begin in earnest.

Austin empowered

And on the subject of property, the news that Austin Reed has put the “for sale” sign up on its Regent Street flagship is not the most reassuring bit of news of the summer.

After a company voluntary arrangement this spring and the closure of 31 stores already, the signs are not good for the business that runs the Austin Reed, Viyella and CC chains.

The AR website reveals the situation with its home page message: “An extra 20% off absolutely everything including all Sale.” Here is another business that, despite sales of £109m, makes a £1.3m loss.

This is not going to be turned round any time soon. And like BHS, how many people would miss the three brands if they disappear in their current form?

New arrival

One subject hanging over from last week’s news list is the imminent departure for maternity leave from September 1 to early January 2016 of Marks & Spencer’s head of multichannel Laura Wade-Gery.

I have been intrigued by the media speculation that the former Tesco executive is a frontrunner to replace M&S’s CEO Marc Bolland when the Dutchman decides he’s had enough of managing the chain, which has been in decline for years.

The word from M&S Towers is that the self-composed Wade-Gery is not a brilliant people person and surely the ability to motivate and inspire Marks’ considerable workforce – plus its vast army of loyal, if ageing, customers – will be high up the list of requirements of the next boss.

In the meantime, I wish the new parents all the best with their imminent new arrival. Some things are more important than flogging clothes.       

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