After the sale of BHS by Sir Philip Green to the previously unheard-of Retail Acquisitions last year, it was only a matter of time before we reached this point.
Bought for £1 because of the heavy debt and pensions liabilities, too much work was needed for the 88-year-old retailer to find its footing again. Even with well-respected Darren Topp at the helm, it was no great surprise that the firm first sought – and received – a CVA, before entering administration yesterday.
Duff & Phelps now plans to run the retailer as a going concern, and sources tell City A.M. that more than 30 enquiries were made even before the ink was dry on the documents placing BHS into administration.
Those documents neatly hand over the £571m pension deficit to the Pension Protection Fund, making the prospect of buying BHS instantly more attractive to the likes of Sports Direct, which is understood to have already carried out due diligence.
But would it really be wise to resurrect it?
Conlumino figures reveal the extent to which BHS has become irrelevant: in 2000, it received 13.4 per cent of fashion shopper footfall, but by last year that had dropped to 8.2 per cent. When it comes to spend, the figures are even more telling: 2.3 per cent 15 years ago, falling to 1.4 per cent now.
Sports Direct has long lusted after a department store operation to house its range of brands – Mike Ashley has stakes in Debenhams and House of Fraser for this very reason – but is unlikely to put any effort into restoring good old British Home Stores to the business it once was.
And this is a world where Primark reigns supreme, one where even budget retailers can't afford to rest on their laurels. It's simply not good enough to offer “cheap” items: consumers have to be wowed or wooed – they cannot be taken for granted.
Simply put, BHS has not had the investment it needed to keep up with the big players, let alone the internet. At this stage, it would require major intervention to make things work.
Just where the fault lies is up for debate, although clearly Green benefited handsomely from his ownership over time. The bigger issue now is whether the new potential owners have deep enough pockets to rebuild BHS into a long-term success story.
In this retail environment, the answer is unlikely to be yes.