BHS: the living wage will make turnaround harder

With the Chancellor's implementation of a national living wage, people over 25 will be paid a minimum of £7.20 an hour from April next year, rising to £9 by 2020 (Getty)

George Osborne’s new living wage will make the three- year turnaround plan of the struggling retailer BHS “more difficult”, its chief executive said yesterday.

George Osborne’s new living wage will make the three- year turnaround plan of the struggling retailer BHS “more difficult”, its chief executive said yesterday.

The admission came as Darren Topp, who was appointed boss shortly after BHS was sold by Sir Philip Green for £1 in March, unveiled a host of new plans to boost sales and revive the 87-year-old, loss-making company.

International expansion, a rollout of mini supermarkets and new contemporary fashion lines were among the measures announced yesterday to help the group return to profitability.

But the new national living wage of £7.20 an hour, to be introduced next April for people aged 25 and over, “will make the whole thing a little more difficult”, Mr Topp said. The retailer employs around 9,600 people in Britain.

At the department store chain’s Watford branch, Mr Topp unveiled new branding from BHS back to British Home Stores and a new in-store convenience food and drinks service.

After agreeing a food contract with wholesaler Booker Group, shoppers can now buy tobacco, bread, milk and “2 dine for £10” deals alongside more traditional BHS items such as clothes and bedding.

It is one of six food stores that the company has opened this year and 20 more will be launched by the end of October. Mr Topp said “there is a big shift away from once-a-week food shopping, to top-up shopping. Our customers all said they wanted a food offering”.

He added that the company was at an advantage because it already has planning permission to open around 140 convenience food departments within its stores. It could open up to 60 more next year.

BHS has also just secured two more tie-ups with other retailers. In seven shops, including on Oxford Street in the West End, it will stock clothes from the womenswear retailer Quiz, which currently has 250 UK shops and concessions.

Meanwhile, a brand that has been spotted on supermodel Kate Moss, Ruby London,s will also be put in a handful of stores. It follows concessions earlier this year for Claire’s Accessories to attract pre-teens, and putting BHS Lighting into some Debenhams stores.

Further afield, the company wants to open six more shops in the Middle East over the next three years, including in Iraq and Saudi Arabia. The group’s highest-turnover store is in Qatar.