Arcadia identifies 23 stores for closure
Written by Peter Walker
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 at its brands Burton, Dorothy Perkins, Topshop and Topman.
Arcadia has instigated seven Company Voluntary Arrangements (CVAs) as it looks to turn the business around following a sustained period of tough 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 from landlords across 194 locations. The remaining 349 locations will be unaffected by the plans.
Arcadia stated that 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.
The group 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 11 US Topshop Topman stores.
Arcadia boss Philip Green's wife Tina - a major shareholder- will also 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 per cent 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.
He continued: “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."