Carpet, Cabbage…and a £571m Black Hole: The Real Story Behind the Fall of BHS

In this episode, Dani and Si dive into the rise and fall of British Home Stores (BHS), blending nostalgia with a sharp look at corporate responsibility and the changing high street. 

They start with childhood memories of rainy Saturdays, fluorescent lighting, and the unmistakable smell of carpet and cafeteria food, before unpacking how a once-solid British institution, founded in 1928, collapsed in less than a century. 

The conversation explores Sir Philip Green’s role in turning a healthy pension surplus into a £571 million deficit while extracting hundreds of millions for himself and his family, the controversial £1 sale to serial bankrupt Dominic Chappell, and the devastating impact on employees, pensioners, and town centres across the UK. 

Danny and Si also zoom out to the bigger picture: the rise of online shopping and fast fashion, the decline of anchor tenants on the high street, and the shift in consumer spending from “stuff” to experiences. With their usual mix of humour, clear explanation, and pointed opinion, they ask whether BHS was doomed by market forces alone -or whether greed and poor leadership sealed its fate.

About Simon and Danielle:

Simon and Danielle are both business owners, based in the East Midlands, who met through mutual business contacts and who share a love of all things business. 

Simon runs Skylight Media – Award-winning experts in Website Design, E-commerce & Marketing running since 2003.

Danielle runs Goldspun Support – a multi-faceted support service for fractional directors and small business owners across the globe, running since 2009.

Since they first met Simon and Danielle have spent a ridiculous amount of time talking about the subjects that interest them – usually over a drink in the pub – and they decided that now was the time to bring these conversations to a wider audience and invite them to join the chat. 

Both Simon and Danielle are successful business owners in their own rights with big plans for the future but will never lose their love of talking all things business… and the pub.

Transcript

Hi, I'm Dani, 

and I'm Si. Welcome to Business in the Brew, a podcast dedicated to all things business with the occasional cover. 

You take a business story, theory, or something we just want to chat about. We debate a blessing of our own special personality and sense of humor, combined with our experience and knowledge. We're both business graduates and have run our own businesses for many years. We can't wait for 

you to listen. Daniel, 

Simon David Pass. 

Got a good one for you today. Okay. Oh, this is whatever happened to British home stores? 

I love British home stores. There's a massive one in Plymouth when I was at Uni. 

Really?

Yeah, I really loved it. 

There's a massive one everywhere too. 

Yeah, we're talking about. We're not talking about. All right, sorry. Anyway, right. Remember this in your childhood. A often rainy Saturday. Your mum needs new cushions. Your dad needs a new work shirt. So you go along with them. Yeah, you end up in a shop. Oh, you look small from 

BHS.

Yes, exactly. Smells faintly of carpet and cafeteria food. 

Carpet, carpet and cabbage. 

Yeah, yeah. Lighting slightly too bright. Everything aisles seems to have something your parents need, but you don't really want. You just want to go to the toy area. Well, that that nostalgia for British home stores. Yeah, it was a, it was a, it was definitely a, a they call it really an institution. Okay. And for generations of British families, it simply was just there. Everyone knew where it was. Staying still to 

gondolas. Exactly. 

Yes. Yes. Loved it. It was picturing exactly where it was in in Nottingham. That was the only one I knew didn't go to. What was it in 

Nottingham? I've lived here that long. It 

was at the bottom of Maid Marian Way. You know that horrible car park at the bottom of Maid Marian Way. Yeah, it was it was right next 

to it, Collins 

Street, and so you could go in there from the outside. I know you could all you could also go in from the inside of the Broadmart Center. Of course, that's all been completely razed to the ground doesn't exist anymore. Yeah, yeah. Nottingham has changed, and everyone remembers it. Well, everyone of an age that 

is ancient 

people like us remember British James. The the 

displays of lampshades, floor to ceiling. You remember that? Yeah. It was founded in 1928, so a year before the Great Depression. That seems like a 

really poor choice of dawn stuff. 

Yeah, because of course they'd know that, wouldn't they? Well, 

that's true. Yeah, yeah. 

And for nearly 90 years, it was a British high street staple: clothes, homeware, food, lighting. It wasn't glamorous. wasn't exciting. Solid, Affordable. That was their 

tagline. We're not exciting, and we're certainly not glamorous. It wasn't, by the way. I looked up their tagline. It's made easy. Was their original tagline? 

Made easy. 

Yeah.

Oh, okay. 

Just that, which is weird because it's not actually a sentence. It's just two words, which makes it a very poor tagline. But anyway, 

but it was dependable. It was there. Yes, you knew where it was. You were going to get as well. Yeah, yeah. At its peak, it had 163 stores across the UK, and it had more internationally as well. And it employed around 11. Which is our right 

for a place called British Home Stores? 

I know, I know. But people aren't a thing for Britain, you know. Yes, we are. And then on the 28th of April, back in 2016, I thought I did. I thought it was longer ago than that, but it went into administration by August. Every single store had closed. I remember the Ferrari around. 

Sorry, 10 years. 

I know. I remember the Ferrari about it, you know. It was, it was. Come on, people's jobs surely can save people's jobs. Surely some of these stores can continue to function. Yeah, 90 years of trading gone in four months. Am I 

seeing how quick it happens when it actually happens? 

Yeah,

it's quick. 

Yeah. So what happened? Right. Well, something happened. One word answer. One word answer. Green, Sir Philip Green. Yeah, 

as in John Lewis. Sir Philip Green. Is he John Lewis? 

Supposed to 

make that one 

of the most celebrated retailers in Britain. The man who owned Topshop, Dorothy Perkins, Miss Selfridge, and the whole Arcadia Empire. Oh, that one. Yeah, yeah, yeah. The man who had been knighted for services to retail. Yeah. man, the tabloids called the King of the High Street. He bought British home stores in the year 2000 for 200 million. Yeah, what happened was one of the most comprehensive acts of corporate vandalism in modern business history. I was saying something really. 

That is quite the visual. 

Yeah, I'll get you some numbers. When he bought bought BHS in 2000, the company's pension scheme was in healthy surplus of 43 million pounds in the black. And over the following 15 years, that surplus became a deficit of over half a billion pounds, 571 million. Yeah, 

good lord. 

And in the same period, he and his family extracted over 580 million from the business in dividends, management charges, interest payments, and rental income. And the sources I've been re-reading about this state that in 2004 alone, he paid himself and his family a dividend of 1.2 billion pounds at the time, the largest single dividend in British corporate history. Can 

you imagine the tax on that. 

Well, it's funny you should say that. 

Oh,

his his wife, who formerly owned the business and lived in Monaco, received the money there entirely legally and entirely free from UK income tax. 

That's galling. 

Yeah, and the whilst the pension pot was falling into deficit, and while the stores were becoming increasingly increasingly shabby, outdated, and unable to compete, 

yes, because of the money, 

with the rise of online shopping, pension fund was falling into deficit. All that was going on, and while the stores were becoming increasingly shabby, outdated, unable to compete with the rise of online shopping and fast fashion, all of that happening at the same time. A joint parliamentary committee reviewing the collapse found that BHS was losing around 70 million pounds a year from 2007 to 2014. That Green had consistently resisted requests from pension trustees for higher contributions, and that in 2012 BHS's pension fund was funded at just 62% of what it owed, compared to an industry median of 81% the The committee's report described what had happened in language that doesn't often appear in parliamentary documents. They called it directly the unacceptable face of capitalism. And what did he do when it became obvious the business was failing? 

Sold it, walked away. 

Yeah,

pretend it wasn't. 

Can you can you imagine for how much? 

A pound. 

Yeah, bang on. Yeah, 

get me. I love it because everyone who does something wrong, right, they sell their business for a pound. Like we don't know what they're doing. Oh 

yeah, yeah, yeah, yeah. So yes, he sold it, and not to a credible buyer with a turnaround plan and fresh capital. Oh yeah, got all this. He sold it for a pound to a man called Dominic Chapel. Now he he's worth examining just for a moment because he's perhaps the most extraordinary choice of buyer for a 200 million pound business in the history of British retail comparison. He was a serial bankrupt. He'd been declared bankrupt three times. I believe he had no retail experience whatsoever. He had no significant personal capital to invest. His consortium called. 

Did he need it? Did he? He had a pound. 

How much have you got? I've got all this. How much do you? 

Hang on, hang on, 

hang on. Five piece. I've got. I've got pound. I 

can scrape together the change. Yeah, his consortium called Retail Acquisitions Limited bought no new money to the deal. A parliamentary committee later described him with admirable directness as a manifestly unsuitable owner, and said it was inconceivable, inconceivable that someone with Green's experience could have seriously believed otherwise. 

But to be fair, you can sell it to whoever the hell you want. If it's your company, you can sell it to whoever the hell you want. 

Patently true. The committee's conclusion was stark. Green had sold BHS in order to avoid paying the pension deficit. Obviously, yeah. Okay. Question 

would be: Why did the idiot at the other end buy it? Why do you want to be responsible for the potential? Here you 

go. Allow me to elucidate. Yeah. Okay. So I've got all this from a number of different sources here. So, but it's pretty pretty much what happened is perhaps what you'd expect for a man with no retail experience, no capital, and three previous bankruptcies taken on a failing 163 store chain with a 51 with a 571 million pound pension black hole. What would you do? 

Um, what would I do? Honestly, I don't. I don't know. Where would you try? Where would you probably try and raise capital to reinvigorate the estate in order to try and make it make money? That would probably be my. But then that would just create more debt. So actually, that just makes the problem worse. 

Absolutely, yeah, yeah. So within 13 months, it was in administration. Green tried late in the day to save his reputation by offering to fund part of the deficit, eventually put in 363 million. Okay, that's a fairly good wedge. Yeah, following enormous public and regulatory pressure, and MPs calling for his knighthood to be stripped. Yeah, that's how big this was. But 11,000 people offer. Their jobs. Around 20,000 pensioners faced the prospect of reduced pensions, protected only by the Pension Protection Fund, which meant they received significantly less than they'd been promised. 

Yeah,

yeah. So, did anyone face any legal consequences? No. Well, Chappell was subsequently convicted and received a prison sentence for tax evasion. I 

still want to know what he did in the 13 months to administration. Did he wander around his shops? Did he? 

No idea. the The auditors, Price Waterhouse Coopers, were fined a then record 6.5 million pounds for their failure to properly scrutinize BHS's accounts during Green's ownership, they'd also been selling non-audit services to the group-a classic conflict of interest. Yeah, Green himself was never prosecuted. He kept his knighthood, though the review of it ran into years of procedural complications. He kept his super super yacht. I think that's called Lionheart, which tells you something about himself in it. 

He didn't suffer at all, is what you're essentially saying, 

and his Monaco lifestyle. So you go figure that 

one. Yeah, 

kind of. 

Did you mean the bit where you didn't have to pay tax? 

No, there's a Trumpian aspect to this, but there's a there's a wider story here, though, about the British high street, which is that you know we can't let Green's villainy obscure obscure the bigger picture. British Home Stores was also a victim of forces that have been reshaping the high street for decades, 

and there are other brands. It's 

not just the internet that's done that. Although it does play a part, the fast fashion revolution driven by Zara, H and M, and Primark, offering clothes at BHS prices without BHS's rather beige esthetic. Yeah, the collapse of the anchor tenant model, where department stores and large chains anchored whole shopping centers, and their depart and their departure cascades into wider closures. So basically, you've got that one drawer, 

the big store that everyone goes for, and then all the little ones, and all of a sudden 

it's gone. Yeah, that's right. And I'd never really considered it in that way, but the anchor, you know, is is is incredible. The anchor tenant, the shift of leisure spending from physical retail to experiences, and we are experiencing that ourselves right now. People are delaying purchase right now of high priced goods for the home, and instead going on experiences, going on holiday, you know that kind of thing. They they're kind of getting becoming fed up of things, and travel, eating out, and streaming. You know, an awful lot of that 

is streaming without effort. 

Yeah, yeah, yeah. British Home Stores was underfunded and poorly led, but even a well-run, properly invested BHS would have faced ferocious headwinds in the in the 2000 10s. You know, just coming out of recession, you know, and all of this going on, 

and and you know there are other brands that did the same. You look at Woolworths, CNA, the Arcady Group doesn't really exist anymore in the same way it did. Those some of those brands still exist. The Pier. There were so many companies around that time. They just they couldn't either couldn't revolutionize fast enough, or they didn't have the foresight to 

do so. No, but a question is was it doomed anyway? Well, I mean, it might have been, but it probably wouldn't have been thriving. 

Nothing is predetermined to be doomed. 

No, no, no. I get that. I get that. But you know, it almost implies it operated within a vacuum. But of course, it would have probably been restructured, reduced, reshaped into something viable. You think about what happened to Woolworths. You know, I mean, we ought to visit that one. And the 

large format stores with multi-multi product offerings still exist. You've still got John Lewis and Marks and Spencers. 

Absolutely.

So yes, those places could exist. 

Yes, but it takes 

the right leadership, the right change mindset, 

the right positioning as well. The positioning is everything. You know, if you're positioned down there, 

yeah, middle of the road, probably not the great position. It's 

not. It's not. So, if the money that was extracted had been invested or reinvested, if the pension deficit had been addressed well, it was still manageable. Of course, we can all say this in hindsight. Oh, 100% You know, countless different reports and commentators I've read, you know, if it's been sold to someone with a genuine plan rather than a convenient patsy, what he did was Green did was simply not allowing a failing business to fail. He extracted maximum value for himself and his family whilst it was profitable. Yeah, 

he didn't give it a chance. No. 

Left it starved investment when it while it declined, and then dispose of it in a way that transferred the consequences, and it did. It transferred those consequences: deficit of the pension, job losses, empty shops to everyone else, pensioner staff, pensioner pension protection fund. Of course, you know, government's there to bail it out. You know, and the high streets of Britain, which have never quite recovered from the tide of closures that followed, because 

it then had a knock-on effect. Yeah, 

yeah. And the point had a thought about about what what could be left of of British home stores, and probably in some in some land filth somewhere or a charity shop somewhere. There is a there is a light shade somewhere for BHS coat. Yeah, my favorite 

school skirt was from BHS. I really liked it. Had a thigh slit. 

Oh,

very inappropriate for school. 

Really?

Yeah, I loved it though. It was size 10. Loved it. 

Good grief. Yeah. Anyway, so so yes, you know, for those pensioners, they they at least stepped in to protect the worried pensions. It was imperfectly done, partially, but it held. But yeah, it's more more than pretty much going to be seven of the king of the high street there, yeah. Which is yeah, just just I suppose he's just moved on. 

He ruined. Doesn't 

look back. 

It's him that ruined BHS. Don't get me wrong; it wasn't on a great trajectory anyway. But he ruined it. 

No, yeah, he bad 

man, naughty king of the high street. 

Well, he's he's still alive, and he's probably just-it was probably a very, very difficult time for him in his life, and maybe he's not that really hamster. Maybe I'm being a little bit too generous. 

I I disagree. He bad man. I liked BHS. Their cafe was great. They did lovely tea cakes. 

Yeah, always did lovely donuts. I'm inclined to agree with you. I'm just reporting the stuff, but but you do it factually. 

I'll be mean. Yeah. Thank you. 

Thank you. Thanks for supporting us by downloading and listening to this episode. 

And a massive thank you also to Dawnie, Emily, Nat, and Lewis, and the BTD Studios for all your expertise in bringing our podcasting dream to reality. 

We'd love it if you commented on this episode, as we'd really like to know what you think and what you might like us to cover in future episodes. 

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