BHS might shut its Oxford Street store

Exclusive: Site could be subdivided, or lease sold on if a 'knockout' offer is received

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BHS is reviewing the future of its flagship store on London’s Oxford Street in a move that could culminate in the department store chain moving out of the West End site.

The loss-making retailer has hired the specialist estate agents Harper Dennis Hobbs and Jackson Criss to detail options for the site, which BHS has occupied for about 40 years. Possibilities being explored include subdividing the space with other retailers – a move that would be aided by the existing three entrances to the store.

But Darren Topp, BHS chief executive, said that the company would not rule out selling the store’s lease if a knockout offer was received. He confirmed that other retailers had already shown an interest in taking part of the space before BHS called in the agents.

BHS has 46 years left on the site’s lease, which agents estimate currently costs it about £2m in rent annually. Mr Topp declined to comment on the rent, but said: “Despite the fact that it is in a prime spot, it is not profit-making.”

The store’s staff, who total just under 300 people, are being consulted about the review. “We are keeping them up to speed with what is going on,” Mr Topp said.  Should there be “a requirement for fewer people” the company would look to redeploy affected staff to other London stores. He added that only about 60,000sq ft of the 100,000 sq ft shop is currently being used as trading space, leaving the building under-utilised. The group is also looking at 20 sites in locations where it would like to open BHS stores.

“Proceeds [from any property changes] will give us funds to plough into the turnaround,” Mr Topp said.

The flagship store, long seen as a jewel in the crown among BHS’s shops because of its prime location on London’s most famous shopping street, joins a further 50 stores from Devon to Dundee that are already being reviewed by property agents. Options being examined include sub-letting or renegotiating rents.

The move comes three months after the 171-strong chain was sold for £1 by the retail veteran Sir Philip Green to a little-known group called Retail Acquisitions, which is backed by a number of investors, including brokers and lawyers.

Despite concerns that the sale heralded a future break-up of the department store chain, the company insists that the real estate changes are part of its three-year turnaround plan to steer the group back into the black and restore it to its “rightful place” on the British high street.

Mr Topp has vowed to boost performance at the company through a series of tie-ups with other retailers and ramping up its food offer.

He said that three weeks into piloting Claire’s Accessories in six shops, the results have so far been impressive and the brand was complementing its pre-teen fashion range, Tammy. Meanwhile in August the firm will trial selling BHS lighting through some Debenhams shops.

However, the challenges facing BHS’s new owners include its underlying pensions deficit, which rose to £139m in the year to 30 August 2014, according to the latest accounts filed at Companies House.