Philip Green’s Arcadia collapses into administration

Sir Philip Green’s retail empire Arcadia, which includes Topshop and Burton, has fallen into administration. The collapse puts some 444 leased stores in the UK at risk of closure, in what is one of the most high-profile casualties of the Covid-19 pandemic. It also trades from 22 locations overseas. Around 13,000 jobs are at risk, with 9,294 employees on furlough. No immediate redundancies will be made. Administrators from Deloitte have been appointed to oversee the process. The group’s stores will continue to trade for the time being. The retailer’s ongoing company voluntary arrangement processes will end as a result of the administrators’ appointment. Deloitte will now seek buyers for Arcadia’s businesses. Ian Grabiner, chief executive of Arcadia, said: “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.” Matt Smith, joint administrator at Deloitte, said: “Arcadia sits at the heart of the high street, and has been striving to combat the impact of Covid-19 throughout this year. “Now the effect of the lockdowns, combined with broader challenges facing bricks and mortar retailers, have resulted in a critical funding requirement for the group and today’s administration. “We will now work with the existing management team and broader stakeholders to assess all options available for the future of the group’s businesses. 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.” The group’s pension pot, which has an estimated £350m deficit, is expected to enter the Pension Protection Fund, with staff payouts reducing by 10%. The news comes after Arcadia rejected a £50m loan from Mike Ashley’s Frasers Group earlier today. The Sports Direct owner, which expressed an interest in “participating in any sale process”, said Arcadia declined the offer without engaging in talks. Doubts were cast over the future of the business last week after emergency talks with lenders fell through on a potential £30m loan. Even before the Covid crisis, Arcadia had been struggling to keep up with its online fast-fashion rivals. Last year it secured a restructuring through seven CVA processes, which it had scraped through after landlords opposed its initial proposals. Melanie Leech, chief executive of the British Property Federation, said: “It is hugely disappointing that Arcadia hasn’t managed to find a way forward, and that so many jobs are at risk. Property owners and other creditors will also be hit. “It was only last year Arcadia undertook a controversial CVA, forcing property owners to accept significant rent cuts and promising in return that this would secure the business’ future. “Retailers are grappling with challenges today that pre-date this pandemic but Covid is bringing into sharper focus which businesses have invested, innovated and adapted to changing consumer behaviours.” She added: “Those that have not have very little resilience in the face of economic headwinds and it is their staff and their creditors including property owners, and the millions of pensioners and savers they represent, who are paying for their failure.”   To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette Picture © REX/Shutterstock