BHS eyes a fresh start overseas following Qatari deal

In Britain BHS faced an insurmountable challenge but, in the Middle East, the retailer may still have a lease of life.
The department store chain expanded across the Gulf and set up outposts in smaller markets such as Mongolia, Uzbekistan and the Falkland Islands before it collapsed into administration this year.
While its problems centred on the UK business, which suffered from the rise of online competitors and more fashionable clothing brands, BHS was also battling a retail slump in the Gulf. The low oil price has damaged sentiment and tourists’ spending power has declined because regional currencies are tied to the strong US dollar.
But the lacklustre environment failed to deter Qatari retail group Al Mana, which on Friday bought BHS’s international business and its website.
Wissam al Mana, who runs the retail division of the group founded by his father in the 1950s, has focused mainly on licensing luxury brands such as Hermès and Balenciaga. But the Al Mana conglomerate does already own the franchise to some BHS stores in the Middle East.
Mr al Mana was born in Qatar but educated in London and is married to the US pop star Janet Jackson.
In Dubai, the Gulf’s retail capital, BHS is a well-established brand, its history stretching back to 1992, the early days of the city’s transformation from a regional trading outpost to a global metropolis.
BHS has 74 stores outside the UK, from which it made £52m in 2014, or about 8 per cent of total revenues. However, since the foreign stores were run by independent franchisees that remitted only part of their takings to the British chain, the overseas business is likely to have been larger than this figure suggests.
Insiders say the international business thrived even after the retailer slipped into losses in 2009, although the company has not provided a breakdown of its more recent trading.
BHS’s collapse into administration in the UK after 88 years on the high street raised uncomfortable questions for workers at the regional franchise.
“There has to be a buyer — BHS is our life,” said one staff member at a Dubai store shortly after news of the retailer’s collapse spread.
Trading at a mark-up to British prices, BHS is known in the region for selling quality, middle-of-the-range clothing in a market dominated by high-end luxury at one end and cheap, unbranded goods at the other. “We are the main competitor to Marks and Spencer,” said another assistant.
One Polish expatriate who knew the brand from a trip to the UK said she liked “the quality and aesthetics”.
While the luxury sector has been hit particularly hard by a tourism slump — analysts say demand is down by as much as a third in the Gulf — observers say mid-market operators such as BHS have been less affected.
Al Mana, which focuses mainly on luxury brands Hermes and Balenciaga, will also buy website

However, there were signs in recent months that not all was rosy.
The BHS at the huge Dubai Mall, the most popular shopping destination in the Middle East, closed in June. A manager said it was being renovated, though other staff members were more doubtful, saying business had been bad.
BHS outlets in less popular malls such as Lamcy Plaza and Dubai Festival City have faced tough competition from their more prominently placed competitors, such as Marks and Spencer and Matalan.
Retailers in malls across the Gulf are launching more frequent discount sales to entice increasingly thrifty customers.
It is not known whether Al Mana will continue the franchise arrangement or whether it will seek to take over the stores that it does not already run, some of which are in less developed markets such as Libya and Mongolia. Al Mana could not be reached for comment.
Al Maya Group, which owns the BHS brand franchise in Dubai and Sharjah in the United Arab Emirates, is one of several major Indian-owned expatriate retail chains that established themselves in the Gulf many decades ago.
Meanwhile the franchises in the region’s largest market, Saudi Arabia, as well as Kuwait and Oman, belong to Kuwaiti retail giant Alshaya.
Al Shaya is one of the largest and most sophisticated retail operators in the Gulf. In 2012, the group bought La Senza, the troubled lingerie retailer, only for it to slip back into administration in 2014.


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