The new owners of BHS, which was sold to them by Philip Green for just £1, have unveiled plans to pull the department store out of the red, though accept that it will be a ‘very big challenge.’
Retail Acquisitions Limited bought the department store last week, and its chairman Keith Smith told The Sunday Telegraph that the ‘biggest challenge’ would be the estimated pension deficit of more than £100m.
BHS was owned by Sir Philip Green for 15 years until it was bought by the little-known consortium last week, has 171 stores and employs 11,000 staff. The collection of lawyers, financiers and accountants have allegedly written off the department store’s ‘substantial’ debts.
There was, however, also a mutual agreement with Sir Philip that both parties would annually top up the multi-million pound pension deficit over the next three years.
Despite the shock of the £1 BHS buy throughout the retail industry, the decision to sell to Retail Acquisitions was not a sudden one – negotiations have been taking place for more than a year.
‘Basically we think it is a company that has significant potential,’ Chairman Mr Smith said.
‘There are problems, which is why the deal looks the way it does. We think we have got enough working capital to keep it going and keep it going over with a profit. But it will be at least two years before we will see it coming back to profit.’
Retail Acquisitions plans to use the £90m left on BHS’s balance sheet for funding, which is a combination of funding provided by the group and cash left in by Sir Philip Green.
The Topshop owner also assured that the department store would not be asset-stripped by the new owners. He told The Mail On Sunday: ‘They’ve given commitments to run the business and if they sell assets, they will reinvest money. I hope and believe they will live up to those commitments.’
He also mentioned that the image of BHS has to change.
Mr Smith admitted that the consortium may decide to close un-profitable stores and expand upon the online retailing side of the business. ‘We have got to create a situation where all the stores are receiving the right stock and footfall,’ he said.
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