British tycoon Philip Green's Arcadia fashion group has collapsed into administration, putting over 13,000 jobs at risk and becoming the country's biggest corporate casualty of the COVID-19 pandemic so far.
Deloitte said late on Monday it had been appointed Arcadia's administrator and would seek buyers for the group's brands: Topshop, Topman, Dorothy Perkins, Wallis, Miss Selfridge, Evans, Burton and Outfit.
The group trades from 444 leased sites in the United Kingdom and 22 overseas.
Deloitte said Arcadia's stores would continue to trade, its online platforms would remain operational and supplies to concession partners would continue. It said no redundancies were being immediately announced.
"We will be rapidly seeking expressions of interest and expect to identify one or more buyers to ensure the future success of the businesses," Matt Smith, Deloitte's joint administrator said.
Green, who was pictured over the weekend in Monaco where his 100 million pound (NZ$190.08 million) super yacht Lionheart is docked, acquired Arcadia for 850 million pounds in 2002.
He had no immediate comment but his CEO Ian Grabiner laid the blame for Arcadia's demise firmly on the pandemic.
"In the face of the most difficult trading conditions we have ever experienced, the obstacles we encountered were far too severe," Grabiner said.
While COVID-19 lockdowns pushed Arcadia over the edge, it has struggled in recent years, underinvesting and failing to keep pace with competitors in an increasingly online retail sector.
Its brands were squeezed between the likes of Inditex's Zara, H&M, and Primark and online-only players ASOS and Boohoo.
A restructuring deal was approved by creditors last year, cutting rents and closing stores, but proved only a temporary respite.
Sale process
Mike Ashley's Frasers Group said on Monday it was interested in participating in any Arcadia sale process.
Topshop, once the go-to destination for teenagers and fashion lovers, is regarded by analysts as Arcadia's most attractive asset.
Media reports have also identified Marks & Spencer, Next and Boohoo, as well as private equity players, as potential bidders for individual brands. All three companies declined to comment.
Arcadia's collapse could have a knock-on impact on the future of department store chain Debenhams, which is already in administration and employs 12,000.
Arcadia is one of Debenhams' biggest concession holders.
Shares in JD Sports Fashion, which has been linked with a takeover of Debenhams, closed up 5.9 percent, indicating it was losing interest. Shares in Frasers closed down 5.7 percent.
Pension fund deficit
Arcadia's workforce also faces uncertainty over a deficit in the company's pension fund, estimated by analysts at about 350 million pounds (NZ$665.30 million).
As part of last year's restructuring Arcadia agreed to provide 210 million pounds of security over property assets to the pension schemes, while Tina Green, Philip's wife and the ultimate owner of Arcadia, agreed to contribute 100 million pounds( NZ$190.08 million) to the schemes over three years.
"This is awful news for thousands of Arcadia employees just before Christmas," opposition Labour Party leader Keir Starmer said.
"Philip Green should do the right thing and fill the Arcadia pension deficit."
If he does not pay up, Arcadia's 10,000 pension scheme members should still receive the bulk of their entitlement through the government's lifeboat scheme, the Pension Protection Fund.
Even before the pandemic, bricks-and-mortar clothing retailers in Britain were facing a major structural challenge with the economics of operating stores on traditional leases proving increasingly difficult as more trade migrates online.
Already this year Oasis, Warehouse, Laura Ashley, Peacocks and Jaeger have fallen into administration.
Reuters.
