Sir Philip Green’s Arcadia Group has recently been in the news as high-street retailers continue to struggle to remain relevant. In case you didn’t know, the Arcadia Group is the umbrella corporation behind many of the High Street’s big names, such as Top Shop, Top Man, Miss Selfridge, Wallis, Burton and BHS to name but a few.
There does not seem to be a single, clear reason for Arcadia’s troubles. In comparison, internet-based rivals seem to be thriving, as they offer similar products at lower prices. In an attempt to trade its way out of its financial problems, Arcadia proposed to start trading under a Company Voluntary Arrangement (CVA) in May. It would have meant the closure of 23 stores and the loss of approximately 520 jobs, but involved asking landlords to take a reduction in rent of between 50% and 70%. That was the sticking point which led to the proposal being rejected.
A new vote is now taking place on 12 June, which proposes that the rents will be reduced by 25% and the break clause in the leases are increased from three months to six months, with Lady Green (Sir Philip’s wife) providing £9.5m to plug the immediate need for funds.
Additionally, there is a shortfall in the pension fund, which has a deficit of £750 million. That gap has partly been filled by Sir Philip who has promised £25m, bringing the total cash and security package to £310 million.
Unfortunately for Sir Philip, this pension problem has echoes of a previous chapter in his business when he sold BHS for £1 and was later forced to pay £363 million, having left a pension deficit of £571m.
One of the reasons for Arcadia’s financial woes may be a loss of consumer confidence due to Sir Philip’s recent appearances in the news. After the BHS scandal, he has been under increased scrutiny by the press, with it eventually revealing his use of a super-injunction to prevent being named for his use of non-disclosure agreements (NDAs) to hide evidence that he acted inappropriately towards his staff.
Do you think Sir Philip’s appearance in the news had any effect on his businesses?
Further, he has recently been charged with misdemeanour assault in the US. Do you think those charges contributed to the closure of his US stores?
If, following the meeting on 12 June, the Arcadia Group collapses, it could mean redundancy for around 18,000 staff which would be another nail in the coffin for high street shops.
How would the loss of these shops affect you?
If you are facing redundancy, or have been given a settlement agreement and would like advice, please get in touch with us to see what we can do to help you.
If any of these thing affect you, please give us a call on 0800 8321 554 and you can speak to someone at the firm for a free 15-minute consultation.
