The 'weak link' of Sir Philip Green's group has suffered a sharp sales decline, writes Matt Chapman.
Tales of family-owned businesses struggling to pay the rent are common in the modern hostile retail environment. In this instance, however, the family-owned business in question is not the village shop, but Sir Philip Green's Arcadia retail group.
Its profits plunged almost 40%, from pounds 213.2m to pounds 133.1m, in the 12 months to 27 August. Although Green did not single out BHS' performance, he reportedly described it as having 'lost a bit of money' in 2011, on the back of declining sales.
It is understood that the figures are still masking some major weak showings within the group, because Arcadia's youth brands, which include Topshop, Topman and Miss Selfridge, are said to be trading well.
Green has revealed that up to 260 Arcadia-owned stores could be closed in the next three years as their leases run out. While BHS struggles to lure its, traditionally, older customer base through its doors, it occupies huge stores, the loss of which would leave a noticeable gap on high streets.
Green is not one to shirk a challenge, and is considering selling food in 150 BHS stores that have planning consent to do so, in an attempt to turn around its fortunes. But is that enough to revitalise the old-fashioned brand?
We asked Stuart Mitchell, chief executive of retail agency Live & Breathe, and Peter Cross, managing partner of Mary Portas' agency Yellowdoor, which works with brands and retailers including Clarks and Boden.
ARCADIA PROFITS* Profits pounds 133m down 38% yr/yr *for 12 months to 27 August Source: Arcadia
STUART MITCHELL, chief executive, Live & Breathe
The Leeds branch of BHS is like entering a department-store time warp. The retailer has lost its way. Those managing the business need to understand why people might not want to shop there.
It's become synonymous with C&A and Woolworths - a pair of heritage retailers with brands that were unable to evolve at the pace consumers craved, and so fell victim to a smarter breed of budget retailer.
Customer promotions need a radical retune at BHS. Frequent discounting merely encourages bargain-hunters who buy only when there is a promotion. What about the other weeks of the year?
Savvy retailers give people a reason to shop, be it the range, pricing or quality. BHS has no apparent core rationale.
It must find one pretty quickly.
It needs a greater focus on telling people about the ranges and giving customers what they want. Being a generalist is ambiguous and can lead to missed opportunities with customers. …