BHS collapse: 11,000 jobs at stake as retailer goes into administration

Bloomberg

BHS Group Ltd. expects to enter administration, a company representative said on Monday, putting 11,000 jobs at risk in what would be the biggest U.K. retail collapse since Woolworths Group Plc in 2008.
Advisory firm Duff & Phelps is working with the store owner on the administration, a form of insolvency protection, he said.
BHS, which opened its first store in London almost nine decades ago, has struggled to grow sales against a backdrop of mounting competition.
The chain’s 164 outlets offer everything from clothing and lighting to luggage, which have become readily available from online retailers, discounters and supermarkets. “BHS has long been seen as an anachronism on the high street and it is surprising that it has survived this long,” Jon Copestake, an analyst at Economist Business Unit, said by e-mail. “Visitors to BHS outlets, even in prime locations on key shopping dates, will have been struck by how quiet they have been. The chain simply stopped being relevant to shoppers.”

Pension Deficit
When billionaire Philip Green bought the chain in 2000, 13.4 percent of British clothing shoppers visited BHS. Last year, that had fallen to 8.2 percent, according to researcher Conlumino.
Retail Acquisitions, the investor group that bought BHS from Green for a pound little more than a year ago, hasn’t been able to raise the 160 million pounds ($230 million) it had targeted to revive the chain’s fortunes, according to the BBC.
The 88-year-old company looked to have been given a lifeline last month when its creditors agreed to accept lower rental payments to prevent mass
closures.
BHS’s difficulties have been compounded by a pension deficit that stood at 571 million pounds as of March 4, according to a court document. That figure represents the pension-related liabilities that would be faced by a prospective buyer.
“The biggest question marks will center on what happens to its staff and to its significant pension shortfall,” said Copestake.
BHS, formerly known as British Home Stores, opened its first shop in Brixton, south London, in 1928. The chain was formed by a group of U.S. entrepreneurs, who based the stores on American five-and-dime merchants, setting the top prices in its stores at one shilling, or five pence.
In the four years after Green bought BHS for 200 million pounds in 2000, the retailer paid 420 million pounds in dividends.