Philip Green’s Arcadia Group collapses into administration

More than 13,000 jobs at threat in most significant UK business failure of the Covid pandemic

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

The owner of home names consisting of 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 relocation will safeguard Arcadia from financial institutions while a purchaser is sought for all or parts of the company. Green, 68, is not expected to bid for any of the assets.

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Arcadia’s management will maintain everyday control of business under the light-touch trading administration, the exact same procedure operating at the troubled outlet store chain Debenhams.

Ian Grabiner, the president of Arcadia, stated: “This is an incredibly sad day for all of our coworkers along with our providers and our numerous other stakeholders.

” The effect of the Covid-19 pandemic, including the required closure of our stores for prolonged durations, has badly impacted on trading across all of our brand names. Throughout this immensely challenging time, our concern has actually been to protect tasks and maintain the financial stability of the group in the hope that we could ride out the pandemic and come out fighting on the other side. Eventually, however, in the face of the most tough trading conditions we have actually ever experienced, the barriers we came across were far too serious.”

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

Arcadia has about 450 straight leased stores in the UK and 22 overseas, along with dozens more concessions in outlet store and other outlets consisting of Tesco. Its entry into administration is the greatest British business failure of the pandemic, and the most recent blow to an already damaged UK high street. Arcadia has actually closed more than 100 stores and cut thousands of jobs since its moms and dad business, Taveta, dropped to a ₤ 177.3 m loss in the year to 1 September 2018– Taveta’s last published set of results– with sales over that duration slipping nearly 5% to ₤ 1.8 bn.

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

Matt Smith of Deloitte, the joint administrator, said the coronavirus lockdowns, combined with “wider difficulties” for high street merchants, had led to a “critical funding requirement” for Arcadia, requiring it into administration.

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Mike Ashley’s Frasers Group, formerly known as Sports Direct, used Arcadia a ₤ 50m emergency loan, but that offer was turned down on Monday prior to administrators were hired.

Smith said: “It is our objective to continue to trade all of the brands, and we eagerly anticipate welcoming customers back into shops when much of them are allowed to resume. We will be quickly seeking expressions of interest and anticipate to identify one or more purchasers to make sure the future success of the businesses.”

Retail analysts state that some of Arcadia’s more popular brands, such as Topshop and Topman, could attract possible purchasers, although the administrators may struggle to raise interest in some of the group’s other properties.

The group’s brands had been experiencing years of underinvestment prior to the Covid pandemic and had actually stopped working to keep up with the switch to online selling and digital marketing.

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

Industry insiders stated huge chains consisting of Marks & Spencer and Next, which has actually been expanding its portfolio of brands as a way to use its strong online facilities, may likewise have an interest in taking on the style brand name, which would provide it better access to a more youthful market.

While Ashley has made clear of his interest in Arcadia, his capability to handle 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 restore House of Fraser and update his primary Sports Direct chain.

As employees hope an offer can be done to rescue tasks, the administration also raises concerns for members of Arcadia’s pension fund, which has a projected deficit of ₤ 350m. The pension fund will be assessed for entry into the Pension Defense Fund (PPF), the industry-backed pensions lifeboat.

Nevertheless, the move to the PPF could imply members who have actually not yet reached the plan’s regular retirement age lose 10% of their benefits, even if they have actually currently begun taking the pension.

MPs and trade unions have actually gotten in touch with the Green family, who have benefited throughout the years from huge Arcadia payments, including a ₤ 1.2 bn dividend in 2005, to plug the pension fund’s deficiency.

The family agreed to contribute ₤ 100m of extra funds previously this year as part of a deal with the regulator and transferred security on residential or commercial property possessions, but the scheme is still believed most likely to be short of funds. In 2017 Green agreed to put ₤ 363m into the pension fund for BHS, which he had actually sold for ₤ 1 in 2015 just for it to collapse a year later on.

Stephen Timms MP, chair of the Commons work and pensions committee, said: “There is undoubtedly a moral case for the Green family to do the best thing and warranty Arcadia’s hardworking personnel what is rightfully theirs, whatever occurs this Christmas. But the Pensions Regulator need to also make sure that it is doing everything in its power to eliminate the corner of the pension plan members.

” This is a turning point for the regulator to reveal that it has learned the lessons of previous business collapses, such as those of BHS and British Steel.”

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