What is Arcadia and why is it in the news?
UK retailer Arcadia Group is the debt-stricken owner of the Topshop, Topman, Dorothy Perkins, Burton, Evans, Wallis and Miss Selfridge fashion chains – familiar names to many Irish shoppers.
Provisional liquidators were appointed to its four subsidiaries in the Republic at a late-night High Court sitting on Monday after the UK parent company fell into administration.
The collapse came after days of speculation, with chief executive Ian Grabiner saying the group was "severely impacted" by Covid-19 closures and would be unable to "ride out the pandemic and come out fighting on the other side" as hoped.
Does this mean its shops are closed?
No. Arcadia outlets reopened in the Republic yesterday with other non-essential retailers, while it has concessions in Shaws department stores. In Northern Ireland, its stores are closed in line with Covid-19 restrictions. The company's website is also functioning as normal.
Administrators Deloitte has decided that staying in business during the Christmas season will heighten its chances of finding a buyer or buyers for the company.
What does this mean for Arcadia employees?
Because Arcadia continues to trade, there have been no redundancies as a result of the appointment of provisional liqudators High Court’s granting of an application to appoint joint provisional liquidators – Ken Fennell and James Anderson of Deloitte – to the Irish operations on foot of the group’s collapse. But this will be an anxious time for the 487 people employed in 14 Arcadia stores across the Republic.
They will be hopeful that their jobs can be preserved if buyers for the company – or parts of the company – can be found, but this is an uncertain time for the retail sector, and there are few guarantees. Mandate, which represents about half of Arcadia workers, has called on management to “keep a line of communication open” with the trade union.
Which companies might be interested in buying Arcadia?
Online fashion retailer Boohoo, led by Irish chief executive John Lyttle, is considered a potential buyer for Arcadia's biggest and strongest brands – Topshop and Topman – because Last year, it bought the online operations of struggling brands Karen Millen and Coast and this year it ollowed up by doingdid the same with Oasis and Warehouse.
If a Boohoo deal follows the pattern of its previous acquisitions, however, iti would likely lead to store closures and hefty job losses. As well as the 487 people employed by Arcadia in the Republic, the UK company has some 13,000 staff across 444 stores, although thousands are on currently on furlough owing to the pandemic.
Worryingly, it may be harder still to find a buyer for Arcadia’s other brands.
What are the consequences for gift vouchers?
Gift vouchers for Arcadia stores can still be used online and in open stores. Consumer groups have advised shoppers to spend any they hold as soon as possible.
Vouchers would be worthless if the stores close and any new owner would have no obligation to honour them.
Buying Arcadia brand vouchers this Christmas is not advised.
Who is Philip Green and why he is such a controversial figure?
Erstwhile "king of the high street", Philip Green (68) is the chairman and face of Arcadia, which for tax reasons is ultimately owned by his wife, Monaco-residing Tina Green. He began a career in the rag trade importing jeans to London.
By the time he bought Arcadia in 2002, he was best known as the combative billionaire who had revived the fortunes of department store chain BHS.
But few people were happy with his move to sell BHS to a serial bankrupt for £1 in 2015 shortly before it collapsed: British MPs said the yacht-loving Green had engaged in a “systematic plunder”, reaping hundreds of millions in dividends while leaving it drowning in pension debt. He eventually injected £363 million (€404 million) into the BHS scheme, but there is now a sense of history repeating itself, with Arcadia estimated to have a £350 million hole in its pension fund.
According to the compilers of the Sunday Times rich list, Green is no longer a billionaire.
Where did Arcadia come from?
The group has origins that date back to Montague Burton, a young Lithuanian immigrant to Britain, who founded a menswear retailer that grew to hundreds of shops by the time it went public in 1929 as Burton Group. The company survived two world wars, several recessions and the 1960s "youthquake" – indeed, it was in the swinging Sixties that the Topshop brand began as an offshoot from the Burton-owned Peter Robinson chain.
The group was renamed Arcadia in 1997 after it decided to spin off department store chain Debenhams, with which it had merged in 1985. By this point, brands it already owned or were about to buy – Topshop, Miss Selfridge, Wallis – were expanding rapidly on UK high streets and within a new wave of Irish shopping centres.
Did Covid-19 kill its success?
Although the pandemic created “the most difficult trading conditions” it has ever experienced, Arcadia has been wobbling for a while.
It staved off a collapse in June 2019 after landlords agreed at the last minute to back a string of company voluntary arrangements (CVAs) that gave it the breathing space of rent cuts.
The group has been in retrenchment mode for some time, with Irish revenues on a downward path since the recession and Topshop’s much-celebrated style heyday now long passed. The big problem was that while Arcadia was busy contending with the global rise of Spanish chain Zara and Sweden’s H&M, it also lost customers to online-only brands led by Asos, Boohoo and Pretty Little Thing. The failure to invest in its own online platform while maintaining a large and expensive bricks-and-mortar empire has been cited as its key mistake.
But it is far from the only retailer for which Covid-19 has proven the final blow. On Tuesday morning, Debenhams’ UK company joined its Irish counterpart in liquidation. It had been home to hundreds of Arcadia concessions.