Connect with us

Hi, what are you looking for?

Investing

Sir Philip Green’s Arcadia Group collapses into administration

Topshop

Sir Philip Green’s Arcadia Group has collapsed into administration, putting 13,000 jobs at risk as the retail tycoon’s high street career ends in failure.

The owner of household names including Topshop, Topman, Miss Selfridge, Dorothy Perkins, Evans and Burton appointed administrators from Deloitte on Monday.

No immediate redundancies were made as a result of the appointment and the group’s stores and websites will continue to trade. The move will protect Arcadia from creditors while a buyer is sought for all or parts of the company. Green, 68, is not expected to bid for any of the assets.

Arcadia’s management will retain day-to-day control of the business under the light-touch trading administration, the same process operating at the troubled department store chain Debenhams.

Ian Grabiner, the chief executive of Arcadia, said: “This is an incredibly sad day for all of our colleagues as well as our suppliers and our many other stakeholders.

“The impact of the Covid-19 pandemic, including the forced closure of our stores for prolonged periods, has severely impacted on trading across all of our brands. Throughout this immensely challenging time, our priority has been to protect jobs and preserve the financial stability of the group in the hope that we could ride out the pandemic and come out fighting on the other side. Ultimately, however, in the face of the most difficult trading conditions we have ever experienced, the obstacles we encountered were far too severe.”

Arcadia stores will reopen in England on 2 December when the coronavirus lockdown is lifted.

Arcadia has about 450 directly leased stores in the UK and 22 overseas, as well as dozens more concessions in department stores and other outlets including Tesco. Its entry into administration is the biggest British corporate failure of the pandemic, and the latest blow to an already battered UK high street. Arcadia has closed more than 100 stores and cut thousands of jobs since its parent company, Taveta, slumped to a £177.3m loss in the year to 1 September 2018 – Taveta’s last published set of results – with sales over that period slipping nearly 5% to £1.8bn.

The collapse not only brings to an end Green’s decades-long presence on the British high street, but appears to have been the final straw for JD Sports’ potential rescue of ailing department store Debenhams, where Arcadia is a big supplier. The sports retailer looks likely to pull out of talks, raising the prospect of thousands more job losses at the department store group if an alternative rescue plan cannot be secured.

Matt Smith of Deloitte, the joint administrator, said the coronavirus lockdowns, combined with “broader challenges” for high street retailers, had resulted in a “critical funding requirement” for Arcadia, forcing it into administration.

Mike Ashley’s Frasers Group, formerly known as Sports Direct, offered Arcadia a £50m emergency loan, but that offer was turned down on Monday before administrators were called in.

Smith said: “It is our intention to continue to trade all of the brands, and we look forward to welcoming customers back into stores when many of them are allowed to reopen. We will be rapidly seeking expressions of interest and expect to identify one or more buyers to ensure the future success of the businesses.”

Retail analysts say that some of Arcadia’s more popular brands, such as Topshop and Topman, could appeal to potential buyers, although the administrators may struggle to raise interest in some of the group’s other assets.

The group’s brands had been suffering from years of underinvestment before the Covid pandemic and had failed to keep up with the switch to online selling and digital marketing.

More than 10 buyers are thought to be lining up for Topshop, including online specialist Boohoo, Frasers Group and a number of private equity players.

Industry insiders said big chains including Marks & Spencer and Next, which has been expanding its portfolio of brands as a way to utilise its strong online infrastructure, might also be interested in taking on the fashion brand, which would give it better access to a younger market.

While Ashley has made no secret of his interest in Arcadia, his capacity to take on the business is in doubt. He is also casting an eye over both Debenhams and some brands that formed part of the Edinburgh Woollen Mill Group, while struggling to revive House of Fraser and update his main Sports Direct chain.

As workers hope a deal can be done to rescue jobs, the administration also raises concerns for members of Arcadia’s pension fund, which has an estimated deficit of £350m. The pension fund will be assessed for entry into the Pension Protection Fund (PPF), the industry-backed pensions lifeboat.

However, the move to the PPF could mean members who have not yet reached the scheme’s normal retirement age lose 10% of their benefits, even if they have already started taking the pension.

MPs and trade unions have called on the Green family, who have benefited over the years from huge Arcadia payouts, including a £1.2bn dividend in 2005, to plug the pension fund’s shortfall.

The family agreed to contribute £100m of additional funds earlier this year as part of a deal with the regulator and signed over security on property assets, but the scheme is still thought likely to be short of funds. In 2017 Green agreed to put £363m into the pension fund for BHS, which he had sold for £1 in 2015 only for it to collapse a year later.

Stephen Timms MP, chair of the Commons work and pensions committee, said: “There is unquestionably a moral case for the Green family to do the right thing and guarantee Arcadia’s hardworking staff what is rightfully theirs, whatever happens this Christmas. But the Pensions Regulator must also ensure that it is doing everything in its power to fight the corner of the pension scheme members.

“This is a crucial moment for the regulator to show that it has learned the lessons of previous corporate collapses, such as those of BHS and British Steel.”

Read more:
Sir Philip Green’s Arcadia Group collapses into administration

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

Economy

By Diego Gabriel C. Robles THE Philippine economy expanded by 7.4% in the second quarter — slower than expected — as rising inflation weighed...

Economy

By Abigail Marie P. Yraola, Researcher THE Philippines’ merchandise trade deficit hit another record in June as imports continued to outpace exports despite a...

Economy

THE National Government’s (NG) outstanding debt as a share of the gross domestic product (GDP) eased to 62.1% at the end of June. Data...

Economy

By Keisha B. Ta-asan SOURED LOANS held by Philippine banks fell for a fourth straight month in June, bringing the nonperforming loan (NPL) ratio...

Economy

Smart says third telco player’s PCC complaint meant to avoid liability By Arjay L. Balinbin, Senior Reporter GLOBE Telecom, Inc. on Tuesday said it...

Economy

DMCI Holdings, Inc. reported on Tuesday that its second-quarter consolidated net income went up by 73% to P9.03 billion from P5.23 billion, driven by...

You May Also Like

Investing

Having a good Instagram marketing agency to back up your Instagram account is an absolute must going into the new year. With competition stronger...

Economy

Ivermectin, an existing drug against parasites including head lice, has had a checkered history when it comes to treating COVID-19. The bulk of studies...

Investing

Insomnia is the most common sleep disorder in the global population. Therefore, it is a problem that many people suffer or have suffered throughout...

Investing

Instagram still holds the top spot for social media in terms of building brand reputation and expanding business potential. Every day, more and more...

Disclaimer: SmartRetirementReport.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.