Green’s retail empire could close over 100 stores
Sir Philip Green’s Arcadia group is serving notice on landlords to walk away from more than 100 stores by the end of the summer. The fashion group owns brands such as Topshop and Dorothy Perkins and has 550 stores across the UK, but all are shut due to coronavirus restrictions.
Arcadia was struggling before the pandemic. In 2019 it did a deal to survive with landlords to cut rents and close 23 stores – and 12 more closed this year.
Like other retailers grappling with the fallout from deserted high streets and a collapse in sales, Sir Philip’s retail empire has been thrown into turmoil.
Most of his 16,000 staff are being paid through the government’s furlough scheme and bosses are taking a pay cut.
But the coronavirus crisis is now accelerating a potentially dramatic shrinkage of the business.
Arcadia has already been closing stores over the years as leases expired.
Last June’s rescue deal, known as a company voluntary arrangement, also included many break clauses on leases which allow Arcadia to hand back the keys at relatively short notice.
A number of other leases are also coming up for renewal.
The BBC understands that Arcadia has typically given three months’ notice on at least 100 leases, and potentially it could be significantly higher than that.
However, it does not mean all the affected stores will shut.
New agreements could be reached with some property owners who would have to swallow further rent reductions.
Other retailers are also reviewing store portfolios.
Debenhams said on Friday that seven of its stores would not reopen.
It is trying to secure new deals with landlords that include a five-month rent and service charge holiday.
The department store chain has agreed terms on 120 of its 142 stores so far and is in advanced discussions about the remainder of its estate. The business is in administration to protect it from creditors during the lockdown.
Arcadia’s move buys the business flexibility amid huge uncertainty about the economic landscape ahead.
High street retailers are all trying to hoard cash and slash costs and are worried about trading once restrictions are eased. “I’m not blaming him [Sir Philip]. You’ve got to do what you’ve got to do to protect the business,” said one landlord.