27 July 2020
The latest on the situation of Arcadia Group is that they are said to be on the verge of launching another restructure, after being battered by the coronavirus lockdown. If another restructure is launched, it would be the second for the retail giant in just over a year.
According to The Sunday Times, the company recently put forward a cost-cutting plan to the Pensions Regulator. Though exact details are unknown, it is reported that Arcadia has a defecit of £727 million in its pension funds.
The Retail Gazette report more.
09 April 2020
An update on the situation of Arcadia Group is that they are seeking £50 million worth of funding, approaching banks and hedge funds.
The funding is to be for its distribution centre in Daventry, Northamptonshire, to help support the business through the coronavirus crisis.
A potential lender, approached about the plan has said that the company indicated its interest in getting a deal agreed as soon as it can. Currently there is no further update as to if a deal has been reached or not.
06 April 2020
Arcadia Group is rumoured to be facing a winding-up petition as it cancels orders to suppliers in a bid to stay afloat amid the coronavirus outbreak.
According to a spokesperson for the company, no decisions have been made yet. But, the terms of a rescue plan which was agreed with creditors in June 2019, provided possibility of more store closures than the initially planned 22.
Last week it was reported that court records showed Principle Systems, a subsidiary of marketing company Principle Global, filed a winding-up-petition against Sir Phillip Greens’ retail empire. This is likely to be resolved but indicates a bigger matter than Arcadia are joining other retailers in delaying payments to suppliers in order to conserve cash. It is also likely that the petition wouldn't be heard for a long time anyhow with many hearings being pushed into the Summer.
Principle Systems developed furniture and branding for the latest Ivy Park and Kate Moss collections in Topshop.
It is also heard that Arcadia are likely to serve notice on landlords to walk away from many of its 550 stores this week.
With the coronavirus pandemic hitting, there has been a dramatic fall in revenues for the business amongst other fashion retailers. Many retailers are scared that the once stores can re-open, the economic impact left with greatly reduce demand.
Following the governments lockdown measures, all stores have been forced to shut temporarily. Its e-commerce arm continues, despite a small proportion of sales coming to the group this way, compared to rivals such as Next.
Arcadia Group took further measures and cancelled orders with suppliers and changed payment terms on items already delivered, extending payment terms by 30 days.
Last week, Arcadia Group made 14,5000 of its 16,000 total workforce furloughed, under the government’s Coronavirus Job Retention Scheme. This was for all store staff with the majority of it’s HQ employees to follow this week. Its senior leadership team and board will take salary cuts of between 25 and 50 per cent, whilst group chief executive Ian Grabiner has elected to receive no salary or benefits until the pandemic ends. With regards to fixed-term employment contracts, employees were told they would end early.
The pandemic has worsened Arcadia’s problems after several years of decline and a delayed entrance to the online retail market.
Background to Arcadia’s CVA:
Last year, after weeks of bargaining with landlords, the group moved to paying monthly rent rather than quarterly, with large rent reductions imposed at many trading locations.
The Company Voluntary Arrangement (CVA) it was under also included break clauses that allowed either the company or its landlords to break leases at certain intervals. The agreement covered for 20 Topshop and Topman stores where the company could trigger a break clause within six months of the CVA and a further 19 where leases could be broken after a year. The locations included Westfield Stratford and provincial towns such as Doncaster.