BHS: Death knell tolls as Philip Green puts stores up for sale

It would be the first major sale that the flamboyant 62-year-old has had to make in his career

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The Independent Online

Sir Philip Green’s BHS could disappear from the high street after the billionaire owner revealed that the iconic department store chain is for sale.

The company has received approaches for the business, which has been losing money for the past few years.

Sir Philip’s Arcadia empire, which includes Topshop, Dorothy Perkins and Miss Selfridge, would not name potential suitors, but retail experts suggest that Pep & Co,  the discount fashion venture by the former Asda boss Andy Bond, is the frontrunner.

Other potential buyers include the rival discount fashion chain Primark, and the supermarkets Aldi and Lidl.

Whichever company is the buyer, experts believe it could spell the end of BHS’s 87 years on the high street.

A spokesperson for Arcadia said: “We have had several approaches over the past few months. It is now the company’s plan to explore whether any of these can be brought to a conclusion.”

Sir Philip bought BHS (formerly British Home Stores) in 2000 with a £200m bid from the Storehouse corporation. He quickly turned around the flagging business, which was worth £1.2bn a year later. It made him the fastest paper billionaire in history.

It would be the first major sale that the flamboyant 62-year-old has had to make in his career, and follows years of criticism that BHS has failed to keep up with the changing demands of shoppers.

Richard Hyman, a retail consultant, explained: “Buying BHS was an enormously significant transaction for him as he was very quickly able to re-engineer the business and extract significant value out of it. He is very good at getting the most of the assets he has by reducing the cost base and making it much leaner.

“But the variety store model is no longer fit for purpose and doesn’t have a place on the high street. There used to be four: M&S, BHS, Woolworths and Littlewoods. Two have gone, and we could soon see a third.”

Sir Philip has started to put his Arcadia brands into BHS stores to draw in more customers, and he introduced groceries into some stores last year.

A sale could prove complicated as in 2009 BHS was incorporated into Arcadia rather than being run as a separate business.

The most recent results show BHS made a £69.6m pre-tax loss in 2013, with sales dropping 3.5 per cent to £675.7m, due to writedowns of failing stores. It followed a £116m loss in 2012.

Mr Hyman suggested that now was the right time for Sir Philip to sell, especially since Mr Bond’s investment vehicle was setting its sights on the UK high street. He said: “How often do people with significant financial backing come into the market saying they are going to open 50 stores and it’s believable? It’s a perfect match and it gives Philip Green the chance to extract what he thinks is left in BHS.”

Mr Bond told The Independent: “We’ve set up a vehicle to invest in UK retail, the first project being Pep&Co. I guess from now on we’ll be connected with most sales processes but this is pure speculation.”

Nick Bubb, a retail analyst, said: “BHS has been driven into the ground by the competition from Primark and by its own addiction to discounting. The losses risk dragging down the whole of Arcadia, so it is not surprising that the great man is trying to cut it loose. The question is how much he will have to pay somebody to take it off his hands.”