Thousands of jobs at risk as BHS threatens to close up to 40 stores

Despite being one of the best-known names on the high street, the company has been losing money for years.

It was part of billionaire Sir Philip Green's Arcadia group, which includes Top Shop and Burtons, but he lsold it last year for a token £1 to a group called Retail Acquisitions.

Since the takeover the new owners say they have been working on a turnaround plan to bring BHS back into profit and today said this would involved the proposed use of a Company Voluntary Arrangements, or CVA, to slash its rents and quit loss-making stores.

The company employs around 11,000 people and has 164 stores, including branches in Wolverhampton, Walsall, Merry Hill, Telford and Birmingham.

BHS said it also "intends to reset its cost base" - restructuring its head office and getting rid of levels of management in its stores. It is also trying to tackle its pension fund deficit.

Chief executive Darren Topp said today: "The CVA proposal that we have announced today is a necessary milestone in resetting British Home Stores to ensure its long term future as an iconic British retail brand. Some of our stores are loss making as we are being charged rents that are too high relative to today's market. The CVA will address this issue.

"Although a difficult process to go through, this sets in motion the comprehensive updated turnaround plan that we have identified, and gives British Home Stores a secure financial footing from which to grow and deliver sustainable profitability.

"BHS will continue to trade as usual and we thank our staff and customers for their continued support."

A CVA – a form of insolvency – will need the backing of 75 per cent of BHS's creditors at a vote on March 23 to proceed.

The company says it is 'essential that it resets its costs' to turn itself around after being loss making 'for many years'.

"Although it has sought to reduce property costs through exits and rent renegotiations ... this property led CVA is still needed to address a number of lease agreements in which the group is contracted to pay in excess of market rates."

BHS says 77 of its stores will not be affected by the CVA proposal, while 47 are considered viable and it wants their rent reduced 'to market levels'.

But 40 stores are in the danger zone. BHS says it will continue to run them for at least 10 months, while negotiations are carried out with landlords to reduce their rents 'substantially'. Where the rents are brought down, the stores will stay open. Otherwise they will close.

Meanwhile BHS says it is continuing its work to freshen-up its stores, introducing new convenience food in most of them and improving its online shopping site.

It is also focusing on its in-house brands and reducing the number of products on offer. Store layouts will also be changed.