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- The Arcadia Group, which owns British brands including Topshop, Miss Selfridge, and Dorothy Perkins, could appoint administrators early next week, sources told Sky News.
- The collapse of the group would put 13,000 jobs at risk.
- Arcadia’s brands have been hit by two national lockdowns, which forced non-essential businesses, including clothing stores, to shut.
- In a statement to Sky News, Arcadia confirmed its boards “have been working on a number of contingency options to secure the future of the group’s brands.”
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The struggling fashion conglomerate the Arcadia Group, which has come under fire in recent years, is on the brink of administration, sources told Sky News.
The collapse of the group, which owns British brands including Topshop, Miss Selfridge, and Dorothy Perkins, could put 13,000 jobs at risk.
Arcadia is preparing to appoint administrators from Deloitte as soon as early next week, the sources said, though the plan is yet to be finalized.
In mid-November, sources told Sky News that the group was in urgent talks to secure a £30 million ($40 million) loan for winter, but these proved unsuccessful.
The group owns more than 500 stores across the UK. The sites were shut between March and June during the national lockdown, when all non-essential businesses had to close. The stores in England had to shut again in early November for a four-week lockdown that ends on December 2.
If administrators are called in, Arcadia will continue trading both online and in stores, pending lockdown restrictions, while it waits for buyers, one source told Sky News.
Fast fashion giant Boohoo is likely to be among prospective buyers for Topshop, Arcadia Group's most valuable brand, Sofie Willmott, content head of apparel at GlobalData, told Business Insider. But e-commerce giant Boohoo is unlikely to want to manage its physical stores, meaning that Topshop could be made an online-only brand.
In a statement to Sky News, Arcadia confirmed that its boards "have been working on a number of contingency options to secure the future of the group's brands."
Stores will be reopening next week when the lockdown ends, it added.
The demise of a fashion empire
Apparel is one of retail sectors hit the most by the pandemic. But Arcadia has arguably been harder hit than many of its clothing competitors.
Though some of its brands have well-established e-commerce channels, the majority of their sales are still usually generated in stores, Willmott explained. "Digital channels will not have made up for the significant sales lost from store closures during lockdowns," she said.
Online competitors like Asos and Boohoo have to able to swoop in and record surging profits during the pandemic.
But these fast fashion retailers were already stealing the Arcadia Group's customers prior to the pandemic. Arcadia's share of the UK clothing has slumped to 2.7% in 2020 from 4.5% in 2015, according to figures from GlobalData.
In May 2019, Topshop filed for bankruptcy in the US and shut all of its 11 stores there.
The struggling retail group cut around 500 head office roles in July, and furloughed its retail staff.
Much of the group's controversy comes from its chairman, Sir Philip Green. The business tycoon paid out a £1.2 billion ($1.6 billion) dividend to his wife, who is Arcadia's registered owner, just three years after he bought the group for £850 million ($1.1 billion).
Green also owned the department store chain British Home Stores, which he infamously sold for just £1 ($1.33) in 2015. The chain went bankrupt the next year in the UK's biggest retail collapse since 2008, causing the closure of 163 stores and the loss of around 11,000 jobs.
In June 2019, Green was charged with four counts of misdemeanor assault after a fitness instructor reportedly accused him of unwanted groping in Arizona. Just months before that, a member of the UK parliament named him as the subject of several sexual harassment, racial abuse, and bullying allegations.