Billionaire Philip Green continues to fight as his Arcadia Retail empire denies reports of impending collapse

Billionaire Sir Philip Green faces yet another crisis amid reports in the UK that his retail empire was set to become a major business casualty of the Covid-19 pandemic.

Sky News reported today that after failing to secure an emergency loan of around $ 40 million, Arcadia could call administrators early next week, putting 15,000 jobs in retail chains at risk. detail of Green, including Topshop / Topman, Miss Selfridge, Burton, Dorothy Perkins, Evans and Wallis.

However, in a statement sent with Forbes ahead of the Sky News story, an Arcadia spokesperson said the stores would reopen next week: “We are aware of recent media speculation surrounding the future of Arcadia,” adding, “The brands continue to trade and our stores will reopen in England and ROI [Republic of Ireland] as soon as government restrictions on Covid-19 are lifted next week.

The statement does not respond to claims that Arcadia needed emergency funding, or had plans to bring in Deloitte administrators. The statement added: “The forced closure of our stores for prolonged periods following the Covid-19 pandemic has had a material impact on trade in our business… Arcadia’s boards have worked on a number of emergency options to secure the future. of the Group’s brands. “

Julie Palmer, partner at restructuring specialist Begbies Traynor, says: “Sir Philip Green has exhausted his last lifeline, and the administration can [now] be the must-see destination in Arcadia. “

Sir Philip and the pandemic

In a conversation with Forbes in 2019, Sir Philip Green was keen to highlight the strength of Arcadia’s brands and the future of physical outlets despite the growing popularity of online shopping.

However, the 2020 pandemic and the lockdown that followed across the UK upended Green’s takeover plans and threatened the future of Arcadia’s 600 stores and outlets in the UK.

Since March, Sir Philip has laid off most of his 14,000 employees and asked landlords for rent cuts of up to 50%, later cutting 500 head office employees in July.

The same month, Green was also accused of passing on the financial pain of his struggling retail empire to poorly paid garment workers overseas after his Arcadia group rushed to cancel orders early. of the coronavirus pandemic. Scott Nova, executive director of the Washington DC-based Worker Rights Consortium, said Forbes, “We cautiously estimate that Arcadia has canceled more than $ 300 million in orders worldwide in response to the crisis.” Describing Arcadia in July as one of the “worst players in the industry, engaging in massive order cancellations when the crisis hit, with damaging effects on suppliers and workers around the world.”

The Monaco-based billionaire has faced a scorching 18 months with allegations of workplace bullying and a since-abandoned lawsuit over alleged sexual assault.

Green isn’t the only retail mogul who has been blinded by the twin threat of the pandemic – which has shut stores for months and shattered consumer demand for clothing. Former billionaire Philip Day has seen his EWM group fall into administration, while department store Debenhams continues to close stores across the country.

How much will it cost Sir Philip Green?

The lion’s share of Sir Philip and his wife Cristina Green’s estimated net worth comes from a $ 2.1bn (£ 1.2bn) dividend they paid themselves during the glory days from 2005, when Topshop’s fast fashion and low prices wooed shoppers and turned Arcadia into a 2,000-store retail giant.

However, their net worth of $ 2 billion today fell from $ 4.8 billion in 2018 as the value of Green’s retail empire plummeted. In 2019, when U.S. private equity firm Leonard Green sold its 25% stake in Topshop for just $ 1, the writing was already on the wall. Retail expert Richard Hyman said Forbes then that Arcadia was “worthless beyond the liquidation value of its stock.”

Pension Black Hole

A potential (costly) sticking point for Sir Philip Green is the widely reported deficit in Arcadia’s pension pot. Pensions have long been a controversial issue for Green. In 2017, the mogul faced repeated calls from politicians to be stripped of his knight after selling UK department store chain BHS for £ 1 in 2015 with a hole in the pension scheme that would later cost him 461million dollars to pay.

In June 2019, Green and his wife Cristina reached a deal with the creditors – owners, suppliers and his pension trustees – that would include topping up the pension pot with a single payment of $ 133 million, and $ 33 million. dollars per year for three years in parallel with one – on the contribution payment of $ 33 million to cover the deficit.

However, in September 2019, a British politician told Green to make it clear the size of the hole in his group Arcadia’s retirement pot which he said was between $ 660million (£ 537million) and 893 million. million dollars (727 million pounds).

Now a former MP after losing his seat in the December 2019 general election, said MP Frank Field Forbes, “We know the deficit is bad, otherwise its size would be released. The fact that it is not being published makes it doubly worrying, and I wrote today to [holding group] Taveta to request this information.

“The truth is he’s a billionaire based on these companies, and the retirees of these companies are entitled to some of his billions.”