Biggest Covid failure
Shop jobs at risk as Arcadia falls into administration
Stores will remain open (pic: Terry Murden)
Arcadia group plunged into administration tonight becoming the biggest corporate casualty of the coronavirus pandemic.
The collapse of Sir Philip Green’s retail empire puts 13,000 jobs and hundreds of stores, including Top Shop, Burtons, Dorothy Perkins, Miss Selfrige and Wallis, at risk.
Ian Grabiner, 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.”
He added: “Our stores will remain open or reopen when permitted under the Government Covid-19 restrictions, our online platforms will be fully operational and supplies to all of our partners will continue.”
A statement from administrators Deloitte said: “No redundancies are being announced today as a result of the appointment and stores will continue to trade.
“The Joint Administrators are assessing all options available to the Group.
Sir Philip Green: said to be on his superyacht
“The administrators will be honouring all online orders made over the Black Friday weekend and will continue to be operating all the existing sale channels of the business.”
Arcadia’s management will retain control of the day-to-day running of the business during the process, and its shops in England will reopen on Wednesday (2 December) when the coronavirus lockdown is lifted. They are trading normally in non-lockdown areas of Scotland.
However, the collapse could cost suppliers £250 million in unpaid invoices, it has been claimed.
One of the administrators, Matt Smith, said all options would be considered and they will be rapidly seeking expressions of interest and expect to identify one or more buyers to ensure the future success of the businesses. Sir Philip Green, 68, and understood to be staying on his superyacht, is not expected to bid for any of the assets.
It was announced earlier that Arcadia had turned down rival Frasers Group’s offer of a “lifeline” loan of up to £50 million.
Frasers said: “Frasers Group were not given any reasons for the rejection (of the loan) nor did Frasers Group have any engagement from Arcadia before the loan was declined.”
Up to ten buyers are already thought to have expressed interest in Topshop. Apart from Frasers, they include online specialist Boohoo and a number of private equity players. Next and Marks & Spencer are also understood to be taking a look at Arcadia’s brands.
Ashley is expected to go head to head with online giant Boohoo to buy Arcadia’s brands, with Topshop likely to attract the highest price tag.
Retail experts said Sir Philip and his wife Tina, who is the official owner of the business, had failed to invest enough in the brands, or build a competitive online business like rivals Zara, H&M and Boohoo.
The group’s pension fund, which has an estimated deficit of £350m, will be assessed for entry into the Pension Protection Fund amid pressure for Sir Philip to make a substantial contribution.
Retail trade union Usdaw said it will seek an urgent meeting with Arcadia’s administrators in an attempt to save jobs and ensure staff are treated fairly.
Dave Gill, Usdaw National Officer said: “Now that Arcadia is in administration it is crucial that the voice of staff is heard over the future of the business and that is best done through their trade union.
“We are seeking urgent meetings and need assurances on what efforts are being made to save jobs, the plan for stores to continue trading and the funding of the pension scheme. In the meantime we are providing our members with the support and advice they need at this very difficult time.
“Over 200,000 retail job losses and 20,000 store closures this year are absolutely devastating and lay bare the scale of the challenge the industry faces. Each one of those job losses is a personal tragedy for the individual worker and store closures are scarring our high streets and communities.”
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Professor John Colley, associate dean of Warwick Business School, said the chain has gone into administration for the want of £30million.
“Sir Philip Green clearly does not feel it is worth funding that from his £1.7 billion fortune to save his reputation.
“Perhaps the various accusations of bullying and sexual harassment, dumping pension fund liabilities by selling BHS for a £1, and the recent creditors voluntary arrangement (CVA) has brought him to this point. CVAs rarely work for long and this looks to be no exception. They are usually just a stage on the path to administration.
“Arcadia has been slow to invest in digital technology and ultimately has paid the price. Indeed its later years have been characterised more by financial engineering than investment.
“COVID has only accelerated administration and not caused it. Likely buyers will be the online sellers who want some sort of high street presence to present their products.
“Don’t expect a rush, as until high street demand returns buyers will not hurry. High street landlords are in for more difficult negotiations with the new owners.”