BHS crunch talks with top 200 suppliers

BHS has held two crunch talks with hundreds of suppliers to reassure them of the future of the business.

The department store has warned that dozens of its shops could be shut unless landlords slash the rents, and last week it said it was cutting 150 staff from its head office and 220 from shops.

Major suppliers attended the meetings with senior management in daventry, West Midlands, yesterday. It is thought they feared that bills would go unpaid.

The High Street stalwart – which employs 10,000 staff at 164 shops – was sold by billionaire Sir Philip green for £1 last year to a group of little-known entrepreneurs called Retail Acquisitions.

It has embarked on a high-risk stand-off with landlords, warning that 40 stores may close unless rents are cut ‘substantially’.

The move to drive down the rental bill is part of proposals outlined in a controversial form of insolvency known as a company voluntary arrangement (CVA) aimed at restructuring the business.

The crisis talks with suppliers will go some way to appeasing the fears of those that hold major contracts with the department store.

A spokesman for Retail Acquisitions said the talks were ‘not a crisis meeting’ but more about ‘updating and reassuring suppli- ers about the CVA and outlining the future strategy’. He said it is ‘about resetting the business, refocusing and then rebuilding BHS’.

Last year suppliers had vital credit i nsurance withheld or slashed amid worries about BHS’s new plans. Credit insurance is vital for a retailer as it provides suppliers with protection in case it runs into financial difficulties and cannot pay its bills.

Separately, Beales, Britain’s oldest department store chain, is also proposing a CVA.

The chain, which comprises 29 department stores, was taken private last year by property group Panther Securities controlled by Ukip backer Andrew Perloff.

It is the landlord of 12 Beales stores and has agreed to support the CVA proposals along with buying group Associated Independent Stores, Beales’ largest supplier.

Beales chairman Stuart Lyons said: ‘Most of Beales’ stores are profitable. A minority of stores lose money because leases agreed some years ago are no longer sustainable due to changes in the economy and local conditions. These legacy rents have been dragging the group down.’

He added: ‘ This is a unique opportunity to restore the group to financial health.’