// Sir Philip Green’s Arcadia Group has unveiled plans to shut down 23 stores as part of a CVA
// The move will put 520 jobs at risk in Arcadia’s UK and Ireland operations
// The retail group’s proposals will also see rent cut at another 194 stores
// All of Arcadia’s 11 Topman and Topshop stores in the US are also set to close
Sir Philip Green’s Arcadia Group has finally confirmed plans to shut 23 stores in the UK and Ireland as part of a CVA proposal.
The move would put 520 jobs at risk while all of the retail group’s 11 Topman and Topshop stores in the US are set to either close down or be sold off.
The CVA proposals also include plans to reduce the rent on 194 other stores. (Scroll down for full list of stores earmarked for closure)
Arcadia said all of its stores in the UK and Ireland will continue to trade as normal until a decision is made on the CVA proposals early next month.
Arcadia directors will meet creditors – which includes pension funds and landlords – on June 5 to seek approval for the proposals.
The CVA will only go ahead if at least 75 per cent of creditors vote in favour of it.
“Against a backdrop of challenging retail headwinds, changing consumer habits and ever-increasing online competition, we have seriously considered all possible strategic options to return the group to a stable financial platform,” Arcadia chief executive Ian Grabiner said.
“This has been a tough but necessary decision for the business.
“We will ensure all potentially affected colleagues are kept fully informed as we seek approval from our creditors on today’s CVA proposals.”
Deloitte partner Daniel Butters said: “Arcadia and its portfolio of iconic fashion brands have faced unprecedented market conditions in recent years, which have significantly impacted the group’s financial performance.
“These CVAs will provide a stable platform for Arcadia’s experienced and committed leadership team to implement its turnaround plan and ensure the long-term sustainability of the group.”
As part of the CVA proposals, Arcadia said it would halve its annual contributions to its pension schemes from £50 million to £25 million.
Lady Tina Green – wife of Sir Philip and a major shareholder of Arcadia – will also inject £50 million of equity into the business, on top of £50 million she has already loaned.
This £100 million total is aimed at addressing Arcadia’s shortfall in pension contributions.
However, the Pensions Regulator has criticised those plans.
“We do not consider the proposals are sufficient to ensure that members of the scheme are adequately protected,” the regulator said.
Lady Green has also offered landlords a 20 per cent stake of any proceeds if Arcadia is eventually sold as part of the CVA.
Despite this, some landlords have expressed concerns that some areas of the proposal need “further clarity”.
Investment bank and advisory firm PJT – which is representing a consortium of landlords such as Hammerson and British Land – said: “[We have] engaged with Arcadia with the aim of agreeing terms on a consensual restructuring to secure the long term future of the business.
“As a result of this, there have been substantial improvements made to the CVA announced today which benefit all landlords, however there are still areas that need further clarity.
“We are now reviewing the detail of the CVA proposal and look forward to continued engagement to ensure a satisfactory outcome for the company, its employees, pensioners, suppliers and all its creditors.”
Signs that Arcadia was looking to restructure first emerged in March when it hired Deloitte to carry out a review of the business, followed by property advisers GCW for representation during discussions with landlords across its store estate.
Last month, US investor Leonard Green & Partners sold its 25 per cent stake in Topshop and Topman back to the parent company, in a move which Arcadia said simplified its structure and would allow the board to focus on restructuring.
Earlier this week, reports emerged that Arcadia’s like-for-like sales plunged by 7.5 per cent in the year to August 2018, while total sales slumped 10.5 per cent to £1.7 billion.
The majority of Arcadia’s financial decline reportedly stemmed from its flagship fashion retailer Topshop, which saw like-for-like sales plummet by 20 per cent in the lead-up to Christmas.
The removal of credit insurance to suppliers also had an adverse impact on Arcadia’s finances, as it prompted many to demand payment for goods upfront.
The financial figures came shortly after Green lost his billionaire status due to a £565 million pension debt that plagues Arcadia, which was valued as “worthless” in this year’s Sunday Times Rich List.
Green and his wife’s stake in Arcadia was last year valued at £750 million, but compilers for the rich list removed £300 million from their worth to allow the shoring up of the deficit.
Green’s reputation has been left damaged by the 2016 collapse of BHS – which was once part of Arcadia for 15 years until he sold it off for £1 in 2015 – which resulted in the loss of 11,000 jobs and a £571 million pension black hole.
The retail tycoon was eventually forced to plug up to £363 million into the scheme of thousands of former BHS employees.
Arcadia is the parent company of Topshop, Topman, Dorothy Perkins, Burton, Wallis, Evans, Outfit and Miss Selfridge.
The firm has 571 stores and 388 concessions in its UK portfolio, and 1170 shops in 36 countries globally, many of which are department store concessions or franchises.
UK Arcadia Group closures:
– Aberdeen (Dorothy Perkins and Burton)
– Ashton-under-Lyne (Topshop and Topman)
– Bedford (Topshop and Topman)
– Bluewater, Kent (Miss Selfridge)
– Cheshunt (Outfit)
– Fareham (Topshop and Topman)
– Glasgow, Buchanan Street (Burton and Topman)
– Luton (Topshop and Topman)
– Newcastle, Northumberland Street (Outfit)
– Nuneaton (Topshop and Topman)
– Reading (Dorothy Perkins and Burton)
– Salisbury (Topshop and Topman)
– Southend (Miss Selfridge)
– Stirling (Dorothy Perkins and Burton)
– Swindon (Miss Selfridge, Wallis, Evans)
– Swindon (Dorothy Perkins and Burton)
– York (Dorothy Perkins and Burton)
– Cork (Dorothy Perkins and Evans)
– Dublin, St Stephen’s Green (Topshop and Miss Selfridge)
– Dublin, Jervis (Topshop and Topman)
– Dublin, Henry Street (Evans and Wallis)
– Dublin, Liffey Valley (Wallis)
– Galway (Miss Selfridge)