BHS to lease Oxford Street flagship to Polish fashion giant LPP

LPP, which operates 1,574 shops in 17 markets, has signed “a preliminary lease of retail space” with the department store chain to bring its Reserved fashion fascia to the UK.

It is unclear how much space LPP has agreed to take at the sought-after property. Sources close to the deal suggested LPP could even take on the entire unit in order to bring more of its brands to London in a department store-style format.

According to Ergo Store, a Polish company that specialises in the design and fit-out of retail stores, the 25-year lease is understood to be worth 675 Polish Zlotys (£116.5m). Ergo Store said on its website that it has been appointed to transform the store into trading space for LPP.

LPP owns a host of other fascias including Mohito, Cropp Town, House and Sinsay trading in countries including Germany, Russia, Bulgaria, the Czech Republic, Qatar, Kuwait and Saudi Arabia, but does not yet have a presence in the UK.

As previously revealed by Retail Week, LPP was among a number of retailers eyeing BHS’s Oxford Street store, alongside fashion rivals H&M and Zara and Swedish furniture specialist Ikea.

It was understood that BHS’s new owners, Retail Acquisitions, was seeking to split the store into three separate units and sub-let two of them to other retailers to maximise its income, while retaining a smaller presence on Oxford Street.

Sources suggested that Abu Dhabi’s royal family, which owns the freehold on the site, had baulked at a leasehold valuation of around £81m to £89m under plans to divide the store late last year. The terms BHS has agreed with LPP come much closer to their valuation of the property.

But the article on Ergo Store’s website said LPP was yet “to obtain permission for running the store from the owner of the building”.

Property agents Cushman & Wakefield, which was hired last year to advise on various options for the store, is yet to respond to Retail Week’s request for comment.