From the blog
The story of BHS
By Paul Clement
British Home Stores (or BHS as we have come to know it) hit the headlines recently for all the wrong reasons. After reaching agreement with its landlords to reduce rents only a few weeks before, generic it fell into administration when an emergency funding deal failed.
The roots of BHS lie in Brixton in 1928 where two American entrepreneurs launched a new shop to compete with Woolworths. There is some irony in it being two Americans that set up shop with ‘British’ in name over the door. Even more so in that the business they wanted to compete with failed only a few years ago.
Another irony is that, since declaring itself bust, shoppers have returned to the business and it has had record day after record day. Is that due to pangs of guilt that they turned their back on one of the high street’s favourite names…or are they bargain-hunter vultures circling in search of rich pickings as the victim draws its final breath? Whatever the case, the tills have been ringing. And, if you go back to the origins of the business, it was to sell all items at no more than a shilling. Yes, one of our best-known retail names started as a discounter!
So what went wrong? If one was to summarise, I think it may go something like this…
The two Americans had a very clear vision of what they were setting out to create. But, by the 1990’s, that vision had changed; BHS was stock market listed, had over 170 stores in the UK, most of them far too large and expensive, and had expanded globally at huge extra cost. Then, the vultures circled. Firstly, Philip Green bought it and, to his credit, initially returned it to profitability. But then he took out all of the money, most of it paid as dividend to his wife who is a tax exile. Next, with all the money gone, he spat it out again for only £1 and put it into the hands of another so-called entrepreneur who believed that nothing could be turned into something by selling off its assets, reducing its costs and borrowing to make up the difference. In the meantime, little investment was made in keeping up with competing brands, either by store refurbishment or investment on-line.
In truth, BHS lost sight of what it was and lacked investment. It needed more money put in behind a real long-term plan, not what little it had left stripped out. It is tremendously sad to see this great institution of ours in such dire straits…even if we British didn’t exactly invent it in the first place!
A similar article also appeared in Business East published on 17 May 2016