M&S and Debenhams stand the most to gain from a break-up of BHS

M&S and Debenhams stand the most to gain from a break-up of BHS

UK retailers Marks & Spencer and Debenhams stand to gain the most from the break up of high street stalwart BHS, which went into administration last month, according to one analyst. 

Administrator Duff & Phelps called for initial bids for the BHS business last week, garnering a mix of offers; some for the majority of the business, but mostly for parts. With the deadline for bids closing yesterday, a decision is expected to be made this week.

"Hopes are that a buyer can be found for the entire store estate and that its 11,000 employees can be protected," says Patrick O'Brien, content director at Verdict Retail. "Even if such a buyer is found, it is likely to have to conduct major surgery to revive the moribund brand."

According to Verdict data, BHS has consistently lost market share to its competitors in all its key sectors, and its "weak multichannel offer, dated brand and under-invested store environment" mean that any buyer would have to think seriously about retaining the BHS name, O'Brien says. 

Reports yesterday (18 May) suggested John Hargreaves, the founder of Matalan, has joined forces with the owner of Select Fashions to work on an offer to rescue BHS and all of its stores. 

However, O'Brien says: "Only the very bravest of investor should consider retaining BHS in its current dilapidated state, but if such a buyer cannot be found, and the brand is disbanded and store estate sold to other retailers, Marks & Spencer and Debenhams would be the main beneficiaries."

The former, he says, has the most similar customer profile to BHS and hence is more likely to be a first choice for shoppers. However, M&S has made some strategic moves to appeal to a younger, more fashion-conscious demographic in recent years. "BHS customers may be a little surprised about what is on offer when they visit."

BHS has a shopper base aged around 45+ who enjoy the convenience of shopping for a disparate variety of products under one roof, which means that department store rivals such as Debenhams and M&S would be first in line to benefit from its fallout, according to Verdict. 

Clothing specialists at the value end of the market would also benefit, O'Brien says, such as Matalan, Primark and New Look. 

"It is, however, those retailers that make a concerted effort to draw in BHS shoppers, through customer acquisition initiatives such as targeted promotions or local marketing campaigns, that will see the maximum gains."

Where BHS customers also shop for clothing:

Source: Verdict Retail