Arcadia identifies 23 stores for closure as part of rescue plan
Sir Philip Green’s Arcadia Group has identified 23 stores in the UK and Ireland for closure as part of a restructuring plan.
The move will put 520 jobs at risk and include Burton, Dorothy Perkins, Topshop and Topman stores.
Arcadia has instigated seven Company Voluntary Arrangements as it looks to turn the business around following a sustained period of difficult trading. Daniel Butters and Ian Wormleighton of Deloitte have been appointed as nominees to the CVA.
Under the proposals, Arcadia will look to close 23 of its 566 UK and Irish stores while requesting rent reductions and revised lease terms across 194 locations from landlords. The remaining 349 locations will be unaffected by the plans.
Arcadia said no UK or Irish stores will close in the short term, and employees and suppliers will continue to be paid on time and in full. It will also try to redeploy affected staff within the business where possible.
As part of the turnaround proposals, Arcadia is also restructuring its US business following a decision to operate in the country through wholesale partners and online. As a result, it has now commenced a process which may result in the closure of all eleven US Topshop Topman stores..
The group has also announced that Lady Green, Arcadia’s shareholder, will invest £50 million of equity into the group, in addition to the £50 million of funding which was provided in March. She has also agreed to provide all affected landlords with an entitlement to a pro-rata share of 20% of any equity value in the group upon a future sale. Landlords will also be able to claim against a £40 millon compromised creditor fund.
Arcadia will seek creditor approval on the proposals on 5 June.
Ian Grabiner, chief executive of Arcadia Group, said: “Against a backdrop of challenging retail headwinds, changing consumer habits and ever-increasing online competition, we have seriously considered all possible strategic options to return the group to a stable financial platform.
“Following constructive discussions with all key stakeholders, we believe that a CVA is the best course of action to reduce our fixed cost base and ensure we can continue meeting our commitments to pension trustees, staff, creditors and our extensive supply chain for the long term, while continuing to serve customers through our portfolio of quality fashion brands.
“We have in place a well-developed turnaround plan for the group, which includes driving cost efficiencies and managing the refreshed retail store estate and investing in the continued development of our multichannel proposition and logistics. The plan will be executed by the group’s recently strengthened senior management team, made up of top talent from across the retail industry who are committed to returning the group to growth.
“This has been a tough but necessary decision for the business. We will ensure all potentially affected colleagues are kept fully informed as we seek approval from our creditors on today’s CVA proposals.”
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