Sir Philip Green has sold BHS to Retail Acquisitions, in a hope to push Arcadia Group profits.
The news comes as no surprise, after Sir Philip Green put the company up for sale back in January, the consequence of a £21m loss the year before.
The department store chain has 180 stores across the country, along with 11,000 employees. Neil Saunders, Managing Director of Conlumino a retail research agency, believes that the sale is the “best possible outcome for BHS staff” as the chain will remain “largely intact”.
BHS had been a weak link in the successful group, accumulating a 3.5% drop in sales in 2013, resulting in an overall loss of £69.6m. In comparison, Arcadia Group as a whole generated £296m 2013-2014, which Sir Philip Green argues, was “against the background of on-going challenging global market conditions”.
The value of the deal has not yet been confirmed but ITV News Business Editor Joel Hills tweeted:
“Sir Philip Green has indeed sold BHS. For £1. I’m told “substantial” debts have also been written off. Business handed on debt free”.
Green wanted to select an appropriate buyer whose desire was to “take the business forward”. Confirming his confidence in the transaction, he stated, “Retail Acquisitions Limited have a platform to grow the business and return it to profitability”.
Saunders argues that the sale is a sensible strategic move, offloading the weakest brand, “The work and investment required to reinvent BHS is significant and would not have been a prudent use of Sir Philip’s time or resources”
Instead, Green will focus on his more successful businesses such as Topshop, which he is looking to expand further in America.
Saunders believes that Retail Acquisition will have its work cut out, arguing that BHS, “has struggled to rid itself of a dowdy image at a time when its older customer base has become more aspirational and fashion forward”. Saunders suggests that BHS has lost out to value fashion players, such as Primark, Matalan and H&M and that to remain ahead the company will have to “justify their place in the market by offering consumers compelling ranges, multichannel services and great value for money”.
Harriet Green, ex CEO of Thomas Cook has already been approached by Retail Acquisitions to take a position on the company’s board. However, a spokesperson for Green said that she had declined the position.
Keith Smith, the chairman of Retail Acquisitions is not fazed and sees the purchase as a “fantastic opportunity to breathe new life into this iconic British high street brand”. Plans are yet to be confirmed but it will be interesting to see how Retail Acquisitions develops the well known company further.