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Arcadia, the retail group owned by billionaire Sir Philip Green, has been placed into administration, a form of bankruptcy.
Deloitte confirmed in a statement late on Monday that they had been appointed as administrators for the group, which owns brands like TopShop, Dorothy Perkins, and Miss Selfridge. Deloitte’s job is to find the best possible outcome for the business — likely a sale of its assets.
Arcadia operates almost 500 stores across the UK and employs around 13,000 people. Administration leaves the future of those jobs and stores in doubt.
“This is an incredibly sad day for all of our colleagues as well as our suppliers and our many other stakeholders,” Arcadia chief executive Ian Grabiner said in a statement.
Grabiner blamed COVID-19 for the company’s collapse, calling this year “the most difficult trading conditions we have ever experienced.”
“Our priority now is to work closely with the administrators to deliver the best possible outcome for all our stakeholders, in particular our hard-working employees across the group,” he said. “Throughout this process, trading will continue across all of our brands.”
Deloitte said no redundancies would be announced on Monday and stores would continue to trade while it “rapidly” seeks potential buyers for part or all of the business.
Smith said Deloitte will “assess all options available for the future of the Group’s businesses.” Experts said Arcadia was likely to be broken up and said job losses were likely whatever the outcome.
Frasers Group (FRAS.L), the rival retail group owned by billionaire Mike Ashley, said in a statement on Monday morning that it would take part in any bidding process. The company. which owns Sports Direct, said it had also offered Arcadia a loan of £50m ($66.6m) but the offer was rebuffed.
Reports that Arcadia could collapse first emerged on Friday. A spokesperson for the company said at the time that management were “working on a number of contingency options to secure the future of the group’s brands”.
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Arcadia-owner Sir Philip Green built the company into a retail Goliath through a series of acquisition in the early 2000s. At its height, the company’s brands were a stalwart of High Streets across the country and TopShop — Arcadia’s crown jewel — was fronted by model Kate Moss. Arcadia’s success helped Green amass a fortune of almost £5bn at his height.
Arcadia’s star has waned over the last 10 years as the company has struggled to adapt to the rise on online shopping and a new breed of cheap “fast fashion” retailers.
“They have been outgunned in recent years by Primark at one end of the spectrum and the pure-play online retailer including Asos & Boohoo, together with the disruptor brands like Sosandar and Nobody’s Child, amongst others,” retail analysts at Shore Capital wrote in a note on Monday morning.
“Arcadia has been losing market share for some time, suffering too from the tarnished glow of its founder, starved of investment and lacking online competitiveness.”
In recent years, Green was embroiled in the scandal surrounding the collapse of BHS, which he sold for £1 in 2015. MPs voted through a non-binding motion calling for his knighthood to be stripped and Green ultimately agreed to pay £363m to address a shortfall in BHS’ pension scheme.
“Whilst the increasingly tarnished reputation of Sir Philip might not have been immediately associated by consumers with the Arcadia brands, it almost certainly affected the group’s ability to attract and retain senior talent,” said Dr Jonathan Reynolds, associate professor in retail marketing at Oxford Saïd Business School.
The COVID-19 pandemic appears to have been the final blow for Arcadia. Earlier this year the pandemic forced Arcadia to shut all its UK stores and furlough thousands of staff. On Friday, a spokesperson said the pandemic “has had a material impact on trading across our businesses”.