LONDON (Reuters) – British tycoon Arcadia fashion group Philip Green has collapsed into administration, putting more than 13,000 jobs at risk and falling victim to the country’s biggest employer from the COVID-19 pandemic so far.
Deloitte said Monday night that they have been appointed as administrators of Arcadia and will seek buyers for the group’s brands: Topshop, Topman, Dorothy Perkins, Wallis, Miss Selfridge, Evans, Burton and Outfit.
The group trades from 444 sites rented in the UK and 22 abroad.
Deloitte said the Arcadia store will continue to trade, its online platform will continue to operate and supply to concession partners will continue.
It said no redundancy would be announced immediately.
“We will immediately seek expressions of interest and hope to identify one or more buyers to ensure future business success,” said Matt Smith, Deloitte co-administrator.
Green, pictured over a weekend in Monaco where his 100 million pound ($ 133.26 million) super yacht Lionheart was docked, acquired Arcadia for 850 million pounds in 2002.
He did not immediately comment but his CEO blamed Arcadia’s death emphatically on the pandemic.
“In the face of the most difficult trading conditions we have experienced, the obstacles we face are too formidable,” said Ian Grabiner.
British Business Minister, Alok Sharma, said his administration was “very sad news” and the British government would support those affected.
While the COVID-19 lockdown pushed Arcadia to the edge, it has struggled in recent years, underinvesting and failing to keep up with competitors in the growing online retail sector.
Its brands lie between the likes of Zara, H&M, and Primark Inditex and online-only players ASOS and Boohoo.
The restructuring deal was approved by creditors last year, cutting leases and closing shops, but proved to be only a temporary hiatus.
Mike Ashley’s Fraser Group said Monday that they are interested in participating in any Arcadia sales process.
Topshop, once a top destination for teenagers and fashion lovers, is considered by analysts to be 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. The three companies declined to comment.
The collapse of Arcadia could have a major impact on the future of the Debenhams department store chain, which is already in administration and employs 12,000 people.
Arcadia is one of Debenhams’ largest concessionaires.
JD Sports Fashion shares, which have been linked with the Debenhams takeover, closed up 5.9%, indicating a loss of interest. Frasers shares closed down 5.7%.
PENSION FUND DEFICIT
Arcadia’s workforce also faces uncertainty over the company’s pension fund deficit, which analysts estimate to be around 350 million pounds.
As part of last year’s restructuring, Arcadia agreed to guarantee 210 million pounds of property assets for the pension scheme, while Tina Green, Philip’s wife and Arcadia’s final owner, agreed to contribute 100 million pounds to the scheme over three years.
“Philip Green must do the right thing and fill the Arcadia pension deficit,” said opposition Labor leader Keir Starmer.
If he doesn’t pay, the 10,000 members of the Arcadia pension scheme will still have to receive most of their entitlements through the government’s lifeboat scheme, the Pension Protection Fund.
Sharma said administrators have three months to file a report on Arcadia director’s behavior with The Insolvency Service that will determine whether a full investigation is needed.
“I will continue to monitor this process,” he said.
Even before the pandemic, brick and mortar clothing retailers in Britain faced major structural challenges with the economy of operating traditional rental stores proving increasingly difficult as more trade migrated online.
This year Oasis, Warehouse, Laura Ashley, Peacocks and Jaeger have fallen into administration.
Reporting by James Davey in London; Edited by Estelle Shirbon, Rosalba O’Brien and Matthew Lewis