BHS broken promises?

BHS store Image copyright AFP

There was anger at BHS today at what were seen as broken promises made by owners Retail Acquisitions - a consortium of brokers and lawyers who acquired BHS from Sir Philip Green in 2015 for just £1.

After landlords and creditors agreed to a massive cut in what they were owed last month, £100m was still needed.

That was to be funded by property sales and a new loan facility. Both fell short of the mark leaving a £50m hole.

Talks to secure a last minute reprieve from Sports Direct faltered over the pension scheme's £571m deficit and it was perhaps always fanciful that a buyer could be found before that millstone had been safely winched aboard the pensions lifeboat fund.

While failing to secure funding, Retail Acquisitions directors succeeded in paying themselves a lot of money, with £8.4m paid out in the weeks after BHS was acquired for just £1 from Sir Philip Green.

The payment was for "professional fees" but there are questions as to how much of it ended up in the director's pockets. There were also monthly service charges and one BHS source told me "these directors extracted a lot without providing much value in return".

Market share

The role of Sir Philip Green in all this is not over. He, remember, oversaw the period of its decline.

According to retail analysts Conlumino, when he bought it, BHS attracted some 13% of all clothing shoppers through its doors, helping BHS attain a 2.3% share of the clothing market.

Last year just 8.2% of clothing shoppers went through the doors which translated into just a 1.4% share.

Sir Philip Green's focus was arguably on more successful and glamorous parts of his empire such as Topshop.

The Arcadia group, of which BHS was a part, provided him with hundreds of millions in dividends.

As a recent owner he may yet be forced by the pensions regulator to plug some of the £571m deficit in the pension scheme.

He is thought to have offered £80m, he may be asked for more.

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