Arcadia collapses into administration with 13,000 jobs at risk

The fall of Sir Philip Green's company has been swiftly followed with the collapse of rescue talks between Debenhams and JD Sports

JD Sports Fashion PLC -

Sir Philip Green’s Arcadia Group called in the administrators last night, putting 13,000 jobs at risk and causing several potential knock-on effects.

Arcadia has appointed administrators from accountant Deloitte, who said they would now seek buyers for the business.

READ: Arcadia's fate intertwined with Debenhams and other retail rivalries

The group, which owns the TopShop, TopMan, Miss Selfridge, Dorothy Perkins, Burton, Evans and Wallis chains, will continue to trade from most of its 444 sites in the UK and 22 overseas.

Arcadia, which has an estimated £350mln pension black hole that Green is under pressure to plug, failed in talks last week with lenders over a £30mln loan, though has since turned down a £50mln emergency loan offered by Mike Ashley's Frasers Group PLC (LON:FRAS).

Frasers said it would be interested in buying some of Arcadia's assets.

There is also a link to Debenhams, the department store group that is in its second administration and where Arcadia’s stable of brands is the biggest concession holder, accounting for around 5% of annual revenues.  

Rescue talks between Debenhams’s administrators and JD Sports Fashion PLC (LON:JD.) have now ended, FTSE 100-listed JD confirmed on Tuesday morning.

Julie Palmer, partner at business recovery specialist Begbies Traynor, said: “While the Covid crisis has undoubtedly accelerated the company’s decline, in reality, the writing had been on the wall for Arcadia for some time after its competitors forged ahead with high profile online propositions that it simply failed to match.

“All eyes will now be on the possible impact of the news on JD Sports’ proposed rescue deal for Debenhams, which surely now hangs firmly in the balance given how prominently Arcadia brands feature in its stores.”

Analysts at broker Shore Capital said: “It is our expectation that JD may now walk away, and in doing so we believe that Hilco will be appointed as liquidators to Debenhams.

They added: “We also believe that the Frasers Group will be watching developments closely still, potentially looking at acquiring pockets of stock and certain stores, together with running the slide rule over both the Maine and Mantaray own label brands, which are both sizeable (we estimate combined c£150m brands in their own right).

“Additionally, we would expect the new team at John Lewis, amongst others, to be watching to see if Debenhams physical footprint is recycled, given that whilst troubled, Debenhams remains a footfall driver when stores are allowed to open.”

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