Green eyes job and store cuts in Topshop revamp

Philip Green is launching a restructuring of his Topshop empire, attempting to slash costs at the UK’s largest privately held fashion retailer and setting up a fierce battle with landlords.

The scandal-plagued billionaire wants to cut jobs, reduce the store portfolio and lower the rent and rates costs at his Arcadia group, whose brands include Topshop, Burton, Wallis and Miss Selfridge.

Arcadia said it was “exploring several options” to cope with “an exceptionally challenging retail market and . . . continued pressures that are specific to the UK high street”. They did not “involve a significant number of redundancies or store closures”.

One property adviser said there would be “absolute uproar in the industry” if, as expected, Arcadia attempted to use a company voluntary arrangement to reduce costs.

A CVA allows a company to carry on trading while reducing debt but it would be controversial because of the size of the store estate and the considerable personal wealth of Sir Philip and his wife, estimated at more than £2bn.

One of Arcadia’s landlords said: “Under a CVA, we need to see that the management team has a credible proposition to return the business to financial health. Otherwise, this would be a misuse of the CVA process and unfair to other retailers who are working hard in challenging times. We would vote down any such CVA.”

Like other fashion retailers, Arcadia has come under pressure from higher rent, wage and raw material costs, weakening consumer confidence and a structural shift towards online shopping. In the year to August 2017, the last for which accounts are available, underlying operating profit at Taveta, the holding company for the group, fell 40 per cent to £124m. However, the group had net cash of £157m at that point.

The pensions regulator is also in talks with the trustees of Arcadia’s defined benefit pension scheme, people briefed on the discussions said. The scheme had an accounting deficit of £300m in August 2017, although Arcadia is paying in £50m a year to reduce the shortfall. 

The regulator said it could not comment on individual companies, but the issue is particularly sensitive because of the controversy surrounding the 2016 collapse of BHS, which left its underfunded pension scheme with no sponsor. Sir Philip eventually paid £363m into the plan, which has since been sold to insurers.

The tycoon’s reputation has taken another battering more recently after media coverage of alleged sexist and racist bullying, which he has vehemently denied, and the use of non-disclosure agreements to keep the allegations secret. 


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