Sir Philip Green has sold BHS for a nominal £1 to a consortium that counts a former City stockbroker and a racing-car driver among its directors and shareholders.
The underperforming department store chain, which employs 11,000 people in 171 stores in the UK, has been acquired by Retail Acquisitions, a newly formed group of private investors.
Sir Philip said that he and his team had decided to sell BHS to concentrate on his other businesses. “I have never sacked myself before, but it was necessary,” he said. “It was not easy but I had to make a decision. It is a challenging market with more things to learn.”
The consortium, which is seeking to appoint a senior retailer as chairman, believes that BHS has been “unloved and deprived” of investment for a number of years as Sir Philip has focused on his Topshop business.
“This is a fantastic opportunity to breathe new life into this British high street brand,” Keith Smith, the present chairman of Retail Acquisitions, said. “We are convinced that with strategic and focused support we will return BHS to profitability.”
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The new owners are understood to be eager to expand a trial food offering within BHS stores and may consider selling electrical items. They also plan to bring in more concessions operators. A number of Arcadia brands, including Miss Selfridge and Dorothy Perkins, already operate “shops in shops” within BHS.
Little is known about the people behind Retail Acquisitions, but Dominic Chappell, a former racing driver who has competed at Le Mans, held a majority of the shares the day before the deal was announced, according to documents filed at Companies House.
Mr Smith, 76, is a former chief executive of Nabarro Wells, a London-based broker. He was appointed as a director yesterday. Edward Parladorio, a solicitor with several high-profile former clients, is also a director. He helped David Moyes to win damages from Wayne Rooney in 2008.
The business is believe to have been sold debt free and with £80 million cash in the bank, albeit with a pension deficit in excess of £100 million. Nevertheless, retail analysts remained sceptical about the chances of resuscitating BHS. “Can the new owners run a leaner operation than Philip?” Richard Hyman said. “This is as inconceivable as the idea that BHS can start to win back market share. This deal is the next stage in the closure of the business.”
BHS remains one of Sir Philip’s most profitable investments. He bought it in 2000 in a highly leveraged takeover, putting down only £20 million of cash and injecting £180 million of debt. He and his family have since received more than £420 million in dividend payments from BHS.
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The initial turnaround of the department stores helped to cement Sir Philip’s reputation as a dealmaker. He followed the BHS purchase by swooping on Arcadia, the retail conglomerate, before moving, unsuccessfully, to acquire Marks & Spencer.
“I am pleased that we have found a buyer who wants to develop the BHS brand,” he said. “One of my clear objectives in identifying a purchaser was ensuring their desire to take the business forward. The business is handed over in a sound financial position with significant cash balances and banking facilities in place.”
Sir Philip added: “Most of the senior management have been with BHS for a long time. I am confident that they will work seamlessly with the new owners to achieve the very best for BHS.”
BHS has been hit by the downturn in consumer spending. According to accounts filed at Companies House last year, sales fell by 3.5 per cent to £675.7 million in 2013 and the company made a pre-tax loss of £69.6 million, after writing down the value of a number of stores.