Sir Philip Green has said that he believes incorporating external brands is the future direction for department stores, as he plots to up the fashion stakes at his Bhs chain.

Speaking from New York, Green told Retail Week that he would “buy new brands” for Bhs, which has traditionally preferred an own-brand fashion offer. “This is the way I see that the market is going,” he said.

Sources said that Green has been pursuing mid- to high-end brands to add to its menswear and womenswear offer, making Bhs more of a fashion destination.

At the end of last year Green began piloting external brands with handbag label Suzy Smith London, which will now be sold in 10 stores.

Bhs also last year trialled some of Green’s Arcadia brands, including Wallis, Dorothy Perkins and Burton, at its Peterborough store.

Green added: “I am always looking for new ideas. I would buy new brands for [Bhs] if I saw the opportunity.”

Bhs has struggled in recent years, with operating profits down 40 per cent to£30.2m in the year to March 29, 2008.

Green’s strategy mirrors those employed by both Debenhams and House of Fraser to drive margins through pushing sales of own-bought brands.

There has been speculation that Green, along with Debenhams, is interested in acquiring womenswear chain Principles, owned by Icelandic investor Baugur and nationalised Icelandic bank Kaupthing.

Green was in New York promoting the opening of Topshop’s highly anticipated US$20m (£14m) New York flagship store, which debuts on April 2. Commenting on the launch, Green said that there had been an “excellent” reception from both the US press and the public.

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