Sir Philip Green’s high street retail empire has averted the prospect of collapse after securing enough support for a package of rescue measures in a knife-edge vote.
Arcadia Group – whose brands include Topshop, Dorothy Perkins and Burton – needed to win 75% of votes among creditors to win the day.
Under the so-called company voluntary arrangements (CVAs), the tycoon plans to close 50 of his 566 trading outlets employing 18,000 staff across the UK and Ireland.
The vote in the City was delayed by a week as landlords held out for improved terms on rent cuts they were also being asked to approve at 194 of the remaining sites.
Sky News reported on Tuesday how the result – on what was described as the final offer – was in the balance as Arcadia’s second-biggest landlord, Trafford Centre owner Intu Properties, indicated its opposition remained.
The company later confirmed its rejection of the terms, saying: “We firmly believe that the terms of the Arcadia CVA are unfair to our full rent paying tenants and not in the interests of any of our other stakeholders, including intu shareholders and the 130,000 people whose jobs rely on the success of our prime shopping centres.
“While we are disappointed with the outcome of today’s vote, we will work constructively with Arcadia to achieve the best outcome for both sides.”
Other stakeholders in the rescue process included The Pensions Regulator (TPR) and the Pension Protection Fund (PPF) which supported the plans after the Green family agreed to cover improved payments to its retirement scheme.
A rejection of the rescue plans would have likely meant its 9,500 pension scheme members requiring the PPF’s support.
Arcadia – like rival high street operators – have come under pressure from a collapse in consumer confidence at a time of increased costs from things such as business rates and minimum wage rules.
Commenting on the result, the company’s chief executive Ian Grabiner said: “We are extremely grateful to our creditors for supporting these proposals and to Lady Green for her continued support.
“After many months of engaging with all our key stakeholders, taking on board their feedback, and sharing our turnaround plans, the future of Arcadia, our thousands of colleagues, and our extensive supplier base is now on a much firmer footing.
“From today, with the right structure in place to reduce our cost base and create a stable financial platform for the group, we can execute our business turnaround plan to drive growth through our digital and wholesale channels, while ensuring our store portfolio remains at the heart of our customer offer.”
Several sources told Sky News the atmosphere at the CVA vote was fairly dark – with one supplier hitting out at landlord opposition following the conclusion of the voting process as the results were awaited.
Oliver Matei-Buhus, operations director at Paragon Clothing, said: “The landlords are ruthless and self serving and it’s a shame there’s no spirit of community bearing in mind Arcadia has been an excellent tenant for many years.
“It’s a short term view and I don’t think that helps.”
Commenting on the result Chloe Collins, senior retail analyst at analytics firm GlobalData, said the hard work starts now.
She wrote: “Although Arcadia’s CVA has been approved, it is unsurprising that it faced (a) backlash from some landlords who have doubts about the retailer’s future.
“Its leading brands – Topshop and Topman – still have a strong following among millennials, however many of the other, such as Miss Selfridge and Dorothy Perkins, are now irrelevant in a highly saturated market and chances of revival are slim, leading landlords to question whether other retailers could offer their spaces more longevity.
“The decision to add Topshop and Topman to ASOS’ branded offer as part of Arcadia’s turnaround plan is wise to increase the brand’s reach, especially internationally, however it is crucial that the £60m invested into advancing Arcadia’s digital platforms includes competitive and convenient delivery methods to rival ASOS and maintain traction on the brand’s individual sites.
“The £75m invested from Green into its physical stores however is going to be too thinly spread as the agreed closures still leave Arcadia with an estate of around 500 stores which have been neglected for far too long and are now unable to match competition which moves in favour of experience-led shopping.”