Tycoon Philip Green faces ‘break up of fashion empire’
Fallen king of the UK high street warned he cannot trade his way out of trouble: report
British clothing tycoon Philip Green is preparing to break up his fashion empire after being warned it cannot trade its way out of financial crisis, British media reported.
Mr Green, one of the most prominent figures in British retail, is reportedly preparing the ground to sell off parts of his Arcadia Group, which includes Topshop and Miss Selfridge, after narrowly avoiding its collapse into administration in June.
The company rejected the claims, saying that it was "fully focused" on trying to turn around all of its brands.
The Sunday Times, citing unidentified sources, said that plans to separate the brands were being overseen by the group’s chief executive Ian Grabiner. It said that the brands would be sold gradually rather than embarking on a fire sale.
The reported plans have been complicated by the different brands sharing many functions including human resources and IT.
“Breaking it up is very, very difficult,” the Sunday Times quoted a source as saying.
Arcadia has stores in 36 countries outside of the UK including across the Middle East. The UAE hosts branches of all of its best-known brands including Wallis and Burton, according to the Arcadia website.
The reported plans follow a turbulent year for Mr Green who struck a deal with landlords to cut rents at his high street shops to prevent the collapse of the group that he bought for £850 million in 2002. Twenty-three stores are planned for closure under the agreement.
The group held off total collapse into administration in June after creditors approved Mr Green’s restructuring plan. The proposal included improving break clauses for leases and asking landlords to agree to rent cuts of between 25 per cent and 50 per cent. The Green family will invest £9.5m to cover the shortfall in rent.
Arcadia said it would press ahead with its plans for restructuring after US landlords last week withdrew a challenge to its plans.
Earlier this year, the struggling fashion group announced that it had significant liquidity issues and it struggled to pay fixed charges of £100m a year. Its earnings are also expected to fall to £30m in 2019, down from £219m two years ago.
The reputation of the tycoon was tarnished following his sale of the department store BHS which collapsed in 2016 with a huge pension deficit. In May, Mr Green’s wife Tina Green, who is the formal owner of the group, offered to bridge the pension scheme’s shortfall with £25m a year for the next three years, plus another £25m contribution, for a total payment into the scheme of £100m.
MPs who investigated the collapse said that Mr Green had blamed everybody but himself for its collapse.
Mr Green has also faced personal difficulties. He has been charged with assault in the US and failed in an attempt to keep his identity secret over a series of harassment allegations reported in the British media.
Arcadia rejected the reported claims and described them in a statement as "wholly inaccurate" and unfounded. "It was written without any attempt to contact the company or any of its advisers," it said.
Updated: September 1, 2019 10:03 PM