Arcadia Group is a fashion retail chain that operates through retail sales and online. Burton, Perkins, Evans, Topman and Outfit are the product offerings of the company under its brand name. The company operates 1,170 stores and has a geographic presence in 36 countries worldwide. Recently the company had been planning to close down some of its stores. They had drawn a list stores which company no longer wants to operate including best-known shopping centres - the step taken by the company to carry a fight with the UK’s biggest proprietors.

The list includes 67 stores despite their sizes in the UK and Ireland. These stores have been occupied by Arcadia from across Sir Philip’s sprawling empire. The total store operating costs for Arcadia is nearly £11 million in yearly rent. As per experts, this would be an official negotiation between Arcadia and landowners over the leases that are too costly or in a famous location. Further, this will outcome in the formation of CVA (company voluntary arrangement) and will support the company to stay in business by rent drops and store closures. [optin-monster-shortcode id="wxhmli4jjedneglg1trq"]

As with other parts of the UK high street, Arcadia’s clothing brands have declined mainly because of the shift by consumers to online shopping, mainly younger consumers who are the major focus for some of its brands. Moreover, it has also been affected by the regular discounts provided by the rivals.

Recently Arcadia is more focussed on exploring new options that would enable the business to operate in a more efficient manner, indicating an exceptionally challenging retail market.

According to experts, despite a longstanding strategy of lease renegotiation, the selected closures has indicated that the company considers its shops to be paying about 25 per cent higher rent. Arcadia has done a lot of work over the past ten years amending and shortening leases. One area where the company may have had less success is at major shopping centres, where landlords have more control.

The group is also thought to have about 200 store leases coming up for renewal in the coming two years; rivals such as Next have reported securing average rent reductions of about 25 per cent upon renewal. The list only shows those stores which could easily get the attention of the potential occupiers, which means these stores are located in some favourable locations and could be reassigned easily.

The property owner companies such as Intu who owns Merry Hill in the West Midlands and the Metro Centre in Gateshead and British Land who owns Meadowhall near Sheffield declined to comment on the ongoing scenario. These companies were earlier exposed to store closures by Debenhams and House of Fraser.

Property advisers say the total number of stores being reviewed by Arcadia could be larger. The company has about 570 UK shops in total, similar to the 593 operated by rival retailer New Look before it launched a CVA (company voluntary agreement) last year. New Look was advised by Deloitte, which is also acting for Arcadia.

CVA will be more wide-ranging and include both closures and rent reductions as per the experts. It will also be massively contentious and there will be a lot of grumpy landlords. Although a CVA process would formally commence with the publication of documentation ahead of creditors’ meetings, advisers say there are usually negotiations before that, with key landlords sometimes able to secure better outcomes in return for pledging their support to the scheme overall.


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