A race against clock to find Arcadia buyer
ARCADIA’S fate could be decided over the next few days, as administrator Deloitte is racing to secure a buyer for the collapsed retailer by Sunday.
Additionally, this week Deloitte will warn that most creditors are highly unlikely to get back all of the money they are owed by Arcadia, which owns Topshop, Topman, Burton, Wallis and a host of other brands. Prior to its collapse, Arcadia employed 13,000 and had around 444 stores.
The retail empire of Sir Philip Green collapsed into administration at the end of November. After years of being starved of investment, Arcadia succumbed to the twin blows of Covid-19 closing its stores and relentless competition from online and real-world rivals, such as Asos, Zara and Primark.
It is understood that Chinese online fast fashion group Shein is the frontrunner to acquire the viable parts of Arcadia. US retail giant Authentic Brands, which is said to be working with JD Sports, is another serious contender.
Next and its partner, investment group Davidson Kempner, walked away from the auction last week as they believed the price was too high. Deloitte however is thought to value the Arcadia businesses as highly as £300million.
The accountancy group is due to send its initial assessment of Arcadia’s financial position to creditors tomorrow. It is likely to show that despite Arcadia having a book value of several hundreds of millions of pounds, its creditors are likely to suffer losses as the business does not have enough value left in it.
Suppliers and other trade creditors are likely to take the brunt of the losses. However, the
Arcadia pension scheme has a measure of protection as it has a claim against Topshop’s flagship Oxford Street store.
One insolvency expert said the situation at Arcadia is reminiscent of House of Fraser, which collapsed in 2018 owing £484million to its suppliers. It had suffered from years of underinvestment and was losing out due to changing shopping habits, just like Arcadia.
He said: “It [Arcadia] has a large balance sheet, but I expect what we’ll get is very poor returns for creditors.”
So far, the only business to emerge from the ruins of Arcadia is plus-sized retailer Evans. It was sold to Australian online retailer City Chic Collective for approximately £23million.
The collapse of Arcadia caps a turbulent few years for former high street king Green who, at the peak of its success, paid himself a £1.2billion dividend.