Retail Acquisitions will build on BHSs existing initiatives

Retail Acquisitions will build on BHS's existing initiatives

UK retailer Arcadia Group has sold its troubled department store chain BHS to Retail Acquisitions in a deal described by one analyst as a "sensible strategic" move. 

BHS, which was acquired by Arcadia in May 2000, operates 171 stores in the UK, of which 14 are dedicated Home Stores. The chain also has 88 international franchise stores in key territories such as Malaysia, Russia and the UAE.

Arcadia, which also owns the Topshop, Topman, Wallis, Dorothy Perkins, Burton and Miss Selfridge brands, revealed it was mulling the sale of BHS after receiving "several approaches" in January.

Last year, BHS saw its losses widen to GBP21m (US$31.5m) for the year to 30 August, compared to GBP19.3m in the same period of the prior year, resulting in a double-digit profit slump for Arcadia.

Commenting on the deal, Arcadia chairman Sir Philip Green said: "I am confident that Retail Acquisitions Limited have a platform to grow the business and return it to profitability."

While Retail Acquisitions chairman Keith Smith added: "We are convinced that with strategic and focussed support we will return BHS to profitability, and safeguard the workforce."

UK-based Retail Acquisitions, which was set up to make acquisitions in its domestic market, aims to build on the chain's existing initiatives, and will appoint a BHS chairman with "significant" retail experience and further retail turnaround experts.

Conlumino analyst Neil Saunders described the deal as a "sensible strategic move", noting: "The work and investment required to reinvent BSH is significant and would not have been a prudent use of Sir Philip's time or resources when he has other, more beneficial, opportunities to pursue."

Although the chain will remain largely intact, Saunders warned that restructuring is likely and over the medium term further store closures will probably be necessary.