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Summary
- Arcadia Group owns 444 stores in the UK and 22 stores overseas and employs nearly 13,000 people who are facing the risk of joblessness.
- The Group has hired administrators from Deloitte to assess all options available for future business operations.
- The Group has become the biggest corporate victim of COVID-19 pandemic so far.
Arcadia Group, the owner of renowned fashion brands like Topshop, Burton and Dorothy Perkins, has become the latest victim to bite the dust in the wake of COVID-19 storm.
The fashion giant has hired administrators from Deloitte to assess all available options for future business. The COVID-19 pandemic has taken a high toll on the Group’s business, and it failed to secure funds to pay its debts.
Fall of the “King of the High Street”
British Businessman Sir Philip Green’s fashion empire, Arcadia failed to generate enough cash to pay its debts and had to hire administrator from Deloitte. The collapse of one of the largest retailers in the UK will put 13,000 jobs at risk, besides burning a £350 million hole in the Company’s pension fund.
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Ian Gabiner, CEO Arcadia, said the obstacles were far too severe in one of the most difficult trading conditions that the organisation has ever faced. He further added that during challenging times, the Group’s top priority is to protect jobs and preserve the financial stability of the Group.
© Kalkine Group 2020
Arcadia owns some of the most famous fashion brands in the UK. Burton, Dorothy Perkins, Evans, Outfit, Topman, Topshop, to name a few. The administrators from the Deloitte would be working with the Group’s management to evaluate all option available to the Group.
Deloitte would ask for an expression of interest from potential buyers for the Group to ensure the future of the business. The potential takeover may include buyers bidding for the entire Group or it may be sold in parts to multiple bidders.
Once the darling of fashion retail, what led to the fall of the empire?
© Kalkine Group 2020
The traditional brick and mortar clothing retail businesses are facing stiff competition from online retailers. The traditional fashion outlets are struggling with the economics of business as leases for the stores at prime locations are getting costlier and shrinking the profit margins.
The phenomenon is global and many of the retail outlet owners like Debenhams, Oasis, Laura Ashley had to hire administrators this year.
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The increasingly higher store running cost along with the loss in sales during the lockdown, is making it difficult for fashion retailers to run the business. They are left with only two choices- closure or migrate to the online platform.
Has Midas lost his touch?
Those who once admired Philip Green are now branding him as an “unacceptable face of capitalism” and holding his governance and decisions responsible for the current crisis. Mr Green has written a cheque of £363 million to save his reputation and to plug the hole in the BHS pension fund.
© Kalkine Group 2020
The Administrator from Deloitte has ensured that shops will remain open as per the COVID-19 guidelines and the Company will honour the Black Friday weekend orders.
