Topman no longer: Sir Philip Green's Arcadia Group falls into administration
This morning Topshop in Cardiff opened as normal and it will continue to for now.
Arcadia is in administration but still trading and no redundancies have been announced yet.
The company blames coronavirus, but Arcadia’s sales were on the slide long before the lockdown.
In a statement the chief executive said: “This is an incredibly sad day for all of our colleagues as well as our suppliers and our many other stakeholders.
“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.”
Sir Philip Green bought Acadia eighteen years ago and really hit the big time.
He already owned BHS and had appeared to transform its fortunes.
Green went on to enjoyed success with access to celebrities and prime ministers.
Tony Blair had him knighted in 2006 for services to retail.
But his fortunes changed.
First BHS went bust a year after he sold it, now the rest of his empire has crumbled.
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Arcadia has collapsed into administration along with its eight brands (Topshop, Topman, Dorothy Perkins, Burton, Wallis, Evans, Miss Selfridge and Outfit) 13,000 staff and 444 shops.
The administrator, Deloitte, will try to sell the loss-making business as a whole or, failing that, parts of it.
The aim will be to raise as much money as possible for Arcadia’s creditors.
Those who are owed money include Arcadia’s banks, its suppliers, the members of its pension scheme, the taxman, its landlords and Sir Philip’s family who have claims on the company’s assets.
The timing of this is interesting.
New rules come into effect on Tuesday, known as “crown preference”, that elevate the claims of HM Revenue & Customs above those of many others in the event of an administration.
Had Arcadia gone into administration on Tuesday, the taxman would have had claim to a greater share of the money raised.
HMRC will be owed many millions in unpaid VAT, national insurance and income tax owed.
Stuart Rose was chief executive of Arcadia when Sir Philip Green bought it.
He later ran Mark & Spencer and in 2004 fought off a takeover bid by GreenRose is not surprised Arcadia has ended up in a ditch and doesn’t think Deloitte will find anyone willing to take the business on in its current form.
“[Philip] is an analogue man who hasn’t recognised the digital world is here, some people have a blind spot about [the internet] but you cant afford not to be there today,” Rose told ITV News
“I used to have a boss many years ago who said: ‘Stuart if you don’t look out of the window everyday then when you finally do you will find the world has passed you by.’
“[Arcadia] haven’t invested. Fundamentally, the business has stood still and expected customers to come to them and customers say: 'Thank you very much but we want other services and we want you to come to us.’”
Rose believes that M&S would be “in quite difficult shape today” had Green successfully taken the business over.
“I believe there would have been a programme of cost-cutting,” he said.
“And I believe there probably would have been further dividends taken out of that business and I think that would have been to the long-term detriment of Marks and Spencer”.
What happens next to Arcadia has implications elsewhere.
The group has concessions in Debenhams.
Around £1 in every £20 that’s spent at Debenhams is spent on Arcadia’s clothing.
Debenhams has been in administration since April - it’s up for sale and if a buyer can’t be found the company could go into liquidation - in which case the vast majority of the business is likely to disappear.
Nowadays, Sir Philip spends most of his time in Monaco, a tax haven.
On Monday night his yacht, LionHeart, sits in the harbour.
Green is no longer a billionaire but is still worth many hundred of millions.
A man of strong opinions, for the moment he’s keeping his thoughts to himself.
This isn’t the end.