BHS has said that it may close up to 40 stores as part of its long term plans to turn the business around. In particular, the company is looking at store rent bills, which it believes are too high in some areas relative to the market.
As such, BHS is proposing a Company Voluntary Agreement, a form of insolvency and common in turnaround plans. It will divide the store portfolio into three categories, contingent on the commerciality and importance of each site to the wider business.
As part of the strategy, KPMG, the proposed supervisor of the CVA, is expected to negotiate with landlords to cut rent in certain areas by up to 50%.
Will Wright, from KPMG, said: “For almost 90 years, BHS has been one of the most iconic brands on the UK high street, but in recent years has seen its profitability decline as it has sought to respond to changing customer behaviours, increased competition and the rise in omni-channel retailing.
“Today’s CVA proposals are one facet of a wider turnaround plan, and specifically tackle one of the business’ largest fixed costs, the onerous lease arrangements across its UK-wide store portfolio.” BHS’s creditors will vote on the CVA on 23 March. A majority of 75% have to agree to the proposals.
