Staff at department store BHS in Peterborough’s Queensgate are today facing an uncertain future.
The retailer has announced that it is seeking a 25 per cent cut in the rent it pays to its Queensgate landlord.
The Peterborough store is one of 21 across the country for which BHS is trying to slash its rental overheads as it battles to restore the loss-making company to profitability.
But BHS needs the consent of the landlords to its proposals.
A spokeswoman for KPMG, which has been appointed as the retailer’s restructuring partner, said: “We are proposing a reduced equivalent monthly rent of 75 per cent of what is currently paid.
“That amount will be paid monthly instead of quarterly as at present. It is intended for the arrangement to last three years.
“We hope to secure the approval of landlords later this month. If we can’t get that approval we will have to look to the viable stores.
“The store will continue to operate as normal while we negotiate with the landlord.”
The exact number of staff employed at the Peterborough store is not available but on average each store employs 50 people. Nationally the firm has 8,500 staff.
BHS, which has 164 stores nationally, was sold last year for a £1 by Top Shop boss Sir Philip Green to Retail Acquisition, made up of a group of investors.
BHS is now trying to secure a Company Voluntary Arrangement (CVA) to turn the business around but creditors have to agree to the CVA.
The retailer claims it is paying over market rates for about a quarter of its stores.
Will Wright, restructuring partner at KPMG and proposed ‘supervisor’ of the CVA, said: “For almost 90 years, BHS has been one of the most iconic brands on the UK high street, but in recent years has seen its profitability decline as it has sought to respond to changing customer behaviours, increased competition and the rise in omni-channel retailing.
“Today’s CVA proposals are one facet of a wider turnaround plan, and specifically tackle one of the business’ largest fixed costs, the onerous lease arrangements across its UK-wide store portfolio.
“While the company’s store estate is located across favourable retail locations, a number of these leases are unsustainable, predicated on terms which were originally negotiated some decades ago.
“With the support of its lenders, shareholders and landlords, the company will be able to reshape its debt and operational structure to a model more suited to today’s multi-channel retail environment.
“The company needs to secure at least 75 per cent creditor approval for these CVAs.”
Brian Green, restructuring partner at KPMG and second proposed supervisor of the CVAs, said: “BHS currently has a total of 164 retail sites across the UK.
“Importantly, none of these stores will close on day one, and suppliers will continue to be paid on time and in full.
“The landlords of a total of 77 of the most viable stores will be retained at current rents which will be paid monthly as opposed to quarterly for three years.
“A further 47 stores have been identified as being viable at a reduced equivalent monthly rent of either 75 per cent or 50 per cent.
“The remaining 40 stores will continue to trade for a period of a minimum of 10 months whilst negotiations with landlords are undertaken to reduce the rents substantially.
“Where rent reductions are achieved, these stores will remain open. It is hoped that the store closure number will be kept to a minimum.”