So poor old BHS, the stores group that once rivalled the (then) mighty Marks & Spencer, is no more. Last week, it became the biggest casualty on Britain’s high street since Woolworths and follows closely another great old retailing name, Austin Reed, into administration.
Although it was expected, it still came as a brutal shock to BHS’s 11,000 staff who received the news on Thursday and immediately had to begin herding customers out of its 164 stores. It was a messy end to 88 years of proud history.
It is far from the end of the story, of course. This one will run and run. The pensions regulator is investigating whether it can force Sir Philip Green, the retail tycoon who sold it to a serial bankrupt called Dominic Chappell for £1 (Dh5) and walked away from a pension fund deficit of £275 million, to make a contribution to the fund. He can afford it: during the 14 years he owned the business – the springboard for his £2 billion fortune – he stripped £500m out of the company by way of cash dividends.
Later today, Guy and Alexander Dellal, former supporters of Mr Green, are due to appear before a parliamentary committee to explain the £35m advance they made to Chappell’s Retail Acquisitions investment vehicle that bought BHS a year ago. Mr Green himself is to appear before the committee next week, an event eagerly awaited by the financial press, which has been hanging on every nuance in this affair. He has just taken delivery of a $160m yacht (his third), and is said to be not quite so keen.
As I write this it is still unclear whether the Dellals, the son and grandson of a legendary property entrepreneur known as Black Jack Dellal, will attend the evidence session: legally they don’t have to but it would be pretty unprecedented if they didn’t. Just in case they don’t, MPs have sent them a list of written questions about their role, which Frank Field, the veteran chairman of the UK Parliament’s Work and Pensions Select Committee, has described as “extraordinary”.
Mr Field has really got his teeth into this one and has already unearthed enough juicy material to fuel the public indignation at one of the most controversial company failures in recent years. On Friday, he published documents from US investment bank Goldman Sachs, which had informally advised on the deal, that he said showed a “remarkable record of the to-ings and fro-ings” and had prompted “new lines of questioning and inquiry”. Darren Topp, the BHS chief executive who presided over the company’s last year of precipitous decline, and former BHS boss Richard Price, are also expected to face questions next week.
Pride of place, however, goes to Mr Chappell whose behaviour grows more bizarre by the day. Mr Chappell will appear before the committee tomorrow and has not exactly endeared himself to its members by remarks discovered on his private Facebook pages. Under the heading “political views”, Mr Chappell states: “All politicians should be treated with the true contempt they deserve.” Mr Field responded: “I’m sort of speechless”, and that he was “just amazed that he’s got time to write this stuff”.
Even that is mild in comparison to some of the emails the semi-literate Mr Chappell has been sending to the BHS management who he is blaming for its failure. Last week, the former racing driver, who has been declared bankrupt three times, sent an abusive text message to Mr Topp blaming him for the winding-up of BHS. “Well done. I hope you and Michael [Hitchcock, BHS’s finance director] are happy that you got the outcome (sic) you wanted.” The rest of the message is too obscene to print in a family newspaper with sensitive readers.
“Curiouser and curiouser”, sighed a more and more bewildered Mr Field.
In the meantime, the British government has ordered a separate investigation into the behaviour of former BHS directors, which could result in their disqualification, if misconduct is found.
Behind all the name-calling and obloquy heaped on Mr Green, there is a more serious message. It is that the traditional British high street is in decline, a mature industry increasingly disrupted by the growth of online shopping and fleet-footed newcomers who can provide more fashionable items at ever lower prices in more attractive stores. Marks & Spencer has now tried just about everything under half a dozen chief executives to turn itself around but in truth it is in a slow terminal decline, which may well end, some years from now, in a fate similar to BHS. Over the next few years retail analysts reckon there could be half a dozen failures of well-known names. Even Next, the star of the industry for the past 20 years, has gone ex-growth although it remains a formidable force.
In the post-war years, the big department stores that had dominated high street shopping for a century were eclipsed by the growth of chains such as Marks & Spencer and BHS. Now it is the turn of the chains to be overtaken by the electronic age.
Ivan Fallon is a former business editor of The Sunday Times.
business@thenational.ae
Follow The National's Business section on Twitter