Topshop owner Arcadia faces imminent collapse
Sir Philip Green’s retail empire Arcadia, which includes Topshop, Burton and Dorothy Perkins, could face collapse within hours. The company could enter administration as soon as Monday, putting 13,000 jobs at risk. Senior sources at the company have told the BBC they do not expect a last-minute rescue deal.
The group had been seeking extra cash to help it plug the gap from lost sales during the pandemic. Administration gives a business protection from its creditors while it is put back on an even keel, or while parts or all of it are sold off.
Some stores could close, but Arcadia’s brands, which also include Wallis and Evans, are household names, and are likely to survive in some form. Questions over the future of Sir Philip’s retail empire were raised on Friday, after it emerged that talks with potential lenders for a £30m loan had failed.
Arcadia was seeking extra cash as coronavirus had had “a material impact on trading” across its businesses, it said. But even before coronavirus, Arcadia’s best-known names were struggling against newer, online-only fashion retailers such as Asos, Boohoo and Pretty Little Thing.
Former City minister and once chairman of Marks and Spencer, Paul Myners, told the BBC: “Regrettably for everyone involved in Arcadia including, in particular, suppliers and employees the game is up. “Covid has obviously been a significant factor but the truth is this group of brands has been haemorrhaging now for 15 years. It’s become an insignificance. Sir Philip never really accepted the opportunity or challenge of online trading. He made no investment in that area at all.”
Maria Malone, principal lecturer at the Manchester Fashion Institute, told the BBC: “This is the UK’s fashion history and heritage going now, Dorothy Perkins and Burtons are 100 years old and Topshop was born out of the swinging 60s.”It used to be the darling of the High Street and he was the king of the High Street. They have not got the balance right between retail price, quality or production and quality of design. [It has] not been the same since 2006 with the departure of the brand director [Jane Shepherdson CBE].”
Billionaire Mike Ashley’s Frasers Group wrote to Arcadia on Sunday saying it would offer an emergency loan of up to £50m to help with the group’s short-term cash-flow problems.
A letter addressed to Arcadia Group executives, and seen by the BBC, said the offer could protect thousands of jobs, stores and pensions, but would be immediately withdrawn if the group, or any of its smaller brands, entered an insolvency process. But on Sunday, a senior source at Arcadia Group told the BBC’s business editor Simon Jack: “If this was about £50m we could find that in five minutes.”
The source added: “This is obviously a sad day, we tried to save it a year ago when £200m was put into the business and the pension fund, but it’s impossible to operate now.
“You don’t know when you’ll be open, you don’t know what stock to buy.”