A Sign of the Times? With the recent publicity surrounding the Administration of BHS and Austin Reed, the question of the viability of the High Street remains. We are all aware of the problems; poor and / or expensive parking, cheaper products on-line, inconvenient opening hours are prohibitive to most people who work a ‘9 to 5’ job. With the supermarkets / retail parks opening as long as they can and selling a fair range of products at competitive prices, why would we want to bother with the High Street? If you look at an average High Street these days, you are bound to see at least one or more of the following; charity shops, betting shops and chain coffee shops. Either gone completely or in the minority are the independent / locally owned small businesses selling hardware, electrical products, the butcher or greengrocer. What is encouraging is that the Administrators of BHS advised that they have received ‘multiple offers’ to buy some or all of the BHS business. They have 164 shops and some 11,000 staff so if any or all of these jobs can be saved then that is good news. The shops are going to be in prime locations and should therefore be attractive to its competitors on the High Street. But why did it fail? We are only able to pick up points from the press, the pension fund deficit is a large factor as is the ‘outdated’ stores and product ranges. The business has debts in the region of £1.3 billion including the pension deficit, that size of liability would be virtually impossible to turnaround. What next for BHS? Well it depends on the route taken by the Administrators, they are tied by what parts of the business they have received offers on, and whether anyone is willing to make a sensible offer for the whole business. The Administrators may only be able to settle the liabilities of the secured creditors, but if it saves the majority or all of the jobs then it may be the best / only option.
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Could this failure have been avoided? Can the High Street be saved? Whether you are a large retailer such as BHS / Austin Reed or a small independent retailer/ High Street business, the warning signs do tend to be there sometimes months prior to any positive action being taken. One thing is for certain, the sooner the warning signs can be recognised, the more options are available to the business owner. The areas to pay specific attention to include ensuring your financial information is up to date and where possible prepare future projections to help you manage cash flow – particularly if the business is going to be affected by seasonal influences. All of which can be planned for. If you are experiencing creditor pressure, perhaps rent and rates arrears, it is imperative that you communicate with your creditors and work with them to put a repayment plan in place. Creditors tend to be understanding and simply want their goods paid for so keeping the lines of communication open is key. This applies to both Banks and HMRC. At LB Insolvency Solutions Limited we are able to assist your business with a confidential and free initial consultation. The purpose of which is to explore the options available to you. At any stage of the process our experience can add value, or provide the solutions for your business. All consultations are confidential, no obligation and free of charge. In the first instance, please contact Andrew Dix or Nicole Southwell on 01245 254791 or email info@lbinsolvency.co.uk
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