Bhs joins Arcadia as Sir Philip Green consolidates

Key operational functions such as logistics, property and finance will be consolidated within Arcadia, but the move could also be a precursor to wider changes to Bhs’s stores.

The initiative will save money by bringing all head office functions within Arcadia, rather than duplicating them across two separate bases. The options for integrating the businesses and the implications for staff are being assessed. “We’re dipping a toe in the water,” Green told Retail Week this week, refusing to comment further as the plans remained at an embryonic stage.

However, there are also likely to be implications for the retail operations of the businesses.
As revealed by Retail Week (October 15, 2008), a trial has been running involving Arcadia’s Burton, Dorothy Perkins, Evans and Wallis brands being stocked in Bhs’s Peterborough store, and Arcadia said it has gone well.

As part of the integration process, the company will look at whether this arrangement can be extended to other Bhs stores, and is examining other retail concepts as well. Bhs has developed a standalone out-of-town homewares concept, two more of which are due to open this year, while last week Green told Retail Week he was considering bringing in other brands to the main chain stores.

In the longer term, there could be opportunities to consolidate store operations and take advantage of the larger footprint of the Bhs stores and their city centre locations. Arcadia’s seven high street brands, which also include Topshop and Topman, occupy more than 2,500 stores in
the UK.

Green has been a vociferous campaigner on the issue of property costs, and making more efficient use of the property portfolio of the combined businesses could be a way of making significant cost savings.

Green bought Bhs from Storehouse in 2000, but while Arcadia’s brands have gone from strength to strength, Bhs has found the going more difficult. Operating profit fell 40 per cent to£30.2m in the year to
March 29, 2008.