‘The obstacles we encountered were far too severe’
Just days into the holiday shopping season, the owner of British fashion retailer Topshop has collapsed into administration. The move places thousands of jobs at risk.
Arcadia, the retail empire of Sir Philip Green – who was once hailed as “King of the High Street” – has called in administrators from Deloitte to explore all possibilities of saving the company after the coronavirus pandemic battered the business.
“The impact of the COVID-19 pandemic, including the forced closure of our stores for prolonged periods, has severely impacted on trading across all of our brands,” Arcadia CEO Ian Grabiner said.
“Throughout this immensely challenging time our priority has been to protect jobs and preserve the financial stability of the group, in the hope that we could ride out the pandemic and come out fighting on the other side,” he said.
“Ultimately, however, in the face of the most difficult trading conditions we have ever experienced, the obstacles we encountered were far too severe.”
With sales plummeting during the lockdown, Arcadia placed more than 9,200 workers on furlough.
While the retailer is yet to announce any staff cuts, the decision to enter into administration affects a total of 13,000 employees – many of whom are assigned to physical stores which have seen months-long closures.
The shops will remain open while administrators prepare to meet with prospective buyers, including Boohoo and ASOS, the BBC reported.
“We will be rapidly seeking expressions of interest and expect to identify one or more buyers to ensure the future success of the businesses,” said Matt Smith, joint administrator at Deloitte.
Apart from the thousands of jobs on the line, Arcadia is also struggling with a £350m (approx. US$468m) deficit in its pension scheme, causing 10,000 members to lose 10% of their benefits.
“Thousands of Arcadia’s existing workforce and its previous employees face the prospect of the value of their pension being greatly diminished in yet another example of bandit capitalism on the UK’s high street,” said Matt Draper, national officer for Unite, which advocates for Arcadia workers.
Arcadia is far from being the only retailer to enter into administration in the wake of the COVID-19 economic crisis. Debenhams, Edinburgh Woollen Mill and Oasis Warehouse have filed for insolvency.
“Now that Arcadia is in administration, it is crucial that the voice of staff is heard over the future of the business and that is best done through their trade union,” said Dave Gill, national officer of the retail trade union Usdaw.
“We are seeking urgent meetings and need assurances on what efforts are being made to save jobs, the plan for stores to continue trading and the funding of the pension scheme. In the meantime, we are providing our members with the support and advice they need at this very difficult time.
“Over 200,000 retail job losses and 20,000 store closure this year are absolutely devastating and lay bare the scale of the challenge the industry faces. Each one of those job losses is a personal tragedy for the individual worker and store closures are scarring our high streets and communities,” he said.