Department store chain BHS has filed for administration after a last-ditch effort to save the ailing retailer failed.
Administrators Duff & Phelps confirmed it has placed BHS into administration today after Retail Week revealed on Friday the department store group was teetering on the brink.
Duff & Phelps said all stores remain open at present as it seeks to sell the business as a going concern. It is thought the firm has received more than 30 expressions of interest in BHS, although it is unclear whether they are for the whole business or parts of it.
Duff & Phelps said: “The group (BHS) has been undergoing restructuring and, as has been widely reported, the shareholders have been in negotiations to find a buyer for the business.
“These negotiations have been unsuccessful. In addition property sales have not materialised as expected in both number and value. Consequently, as a result of a lower than expected cash balance, the group is very unlikely to meet all contractual payments.
“The directors therefore have no alternative but to put the group into administration to protect it for all creditors.
“The group will continue to trade as usual whilst the administrators seek to sell it as a going concern. Further announcements will be made as appropriate in due course.”
BHS staff were told this morning the struggling 88 year-old chain has entered administration, but they will still be paid this month, Retail Week understands.
Retail Week revealed on Friday that BHS faced imminent collapse. Efforts continued over the weekend to try and revive the retailer, with Mike Ashley’s Sports Direct understood to have been in talks over acquiring some of BHS’s 164 stores.
In a letter to staff, BHS’s owner Dominic Chappell said: “It is with a deep heart that I have to report, despite a massive effort from the team, we have been unable to secure a funder or a trade sale.
“I would like to say it has been a real pleasure working with all of you on the BHS project, one I will never forget, you all need to keep your heads held high, you all have done a great job, but remember that it was always going to be very, very hard to turn around.”
Chappell added he was “sincerely sorry”.
BHS was also aiming to secure £60m of funding from specialist lenders Gordon Brothers, but the attempt is understood to have failed last week.
Retail analyst Phil Dorrell said he believed it is unlikely that an outright buyer would be found for BHS. “When the administrators are called in, there won’t be a retailer to buy BHS wholesale. Expect a piecemeal sale of specific sites in strategic locations to John Lewis possibly or Sports Direct or Next,” he said.
“Sadly this is probably the beginning of the end for BHS on our high streets. It would take a brave and innovative business to buy the brand and turn it into an ongoing concern.”
The collapse comes just weeks after BHS had a vital Company Voluntary Arrangement (CVA) voted through and secured about £55m by selling the lease on its Oxford Street store.
The crucial vote meant that BHS, which has been loss-making for seven years, would pay landlords a reduced rent of 75% or 50% on 47 of its stores and 25% rent on 40 of its stores.
BHS was sold by Sir Philip Green to Retail Acquisitions for £1 in March last year.
The department store chain also faces a pension deficit of £571m, which is likely to be picked up by the state-backed Pension Protection Fund. Green has reportedly so far offered £80m to cover the pensions blackhole.