Arcadia: from its roots with Burton in 1903 to near collapse

Guardian Web |

Sir Philip Green’s Arcadia Group, now facing the prospect of collapse, traces its history back more than 100 years.

1903 Menswear brand Burton Group founded in Chesterfield by Lithuanian émigré Montague Burton. It sold ready-to-wear and bespoke suits and relocated to Leeds in 1910.

1929 Burton Group listed on London Stock Exchange.

1945-1950s Company provided demobilisation suits for returning soldiers. Grew rapidly as mass market took off; moved into womenswear with the acquisition of Peter Robinson chain in 1946.

1960s The founder’s son, Raymond Burton, set up Topshop in Sheffield

1970s Topman launched; company acquired other retail brands including Evans and Dorothy Perkins.

1997 Burton Group spun off its Debenhams department store chain and was renamed Arcadia Group. It went on to acquire Wallis, Miss Selfridge and Outfit.

2002 Philip Green bought Arcadia Group for £850m through his Taveta Investments company. He was known as the “king of the high street” for buying and selling businesses.

Green had emerged as a businessman in the 1980s. Having left school at 16, he worked in the family retail business and then for a shoe importer before branching out on his own buying and selling fashion. In 1981 he launched a range of Joan Collins jeans that flopped and in 1988 took over at listed menswear business Amber Day. At first the business thrived but in 1992, after missing profits forecasts, he was ousted and vowed never to be involved in a stock exchange-listed business again.

In 2000, after pulling off lucrative deals including buying the Olympus sports chain, he acquired BHS for £200m. He moved in and cut costs, and profits rose.

At Arcadia he cuts costs by restructuring and cheaper sourcing. The Topshop chain that came with the group was run by Jane Shepherdson, a highly regarded fashion retail expert.

Green’s wife moved to the tax haven of Monaco and the family businesses were transferred into her name.

2005 The Greens paid themselves a £1.2bn dividend from Arcadia, the biggest corporate payout in British history. Because the business was owned by Tina, now living in Monaco, no tax was due on the huge payout.

2006 Green was knighted by Tony Blair for services to the retail industry. Signed deal with Kate Moss to launch a label for Topshop. Topshop boss Jane Shepherdson resigned. Moss designed 14 collections for Topshop until 2010 and returned in 2014.

2009 Green opened Topshop in New York. He pledged to build a “billion-dollar business” in the US.

2010 BHS was now struggling. Green was appointed by David Cameron as adviser on government efficiency.

2012 The billionaire threw a lavish 60th birthday party in Mexico with 150 guests. Stevie Wonder, Robbie Williams and the Beach Boys provided the entertainment. Guests included Hollywood A-listers Gwyneth Paltrow and Leonardo DiCaprio.

2015 Green sold BHS to former bankrupt Dominic Chappell for £1.

2016 BHS collapsed with the loss of 11,000 jobs and left a pension deficit of £571m.

BHS demise sparked a parliamentary investigation. The final report on the scandal from the select committee said: “Sir Philip Green, Dominic Chappell and the respective directors, advisers and hangers-on, who all got rich or richer, are all culpable, with the only losers the ordinary employees and pensioners.” It described the story of BHS as “ the unacceptable face of capitalism”.

The report found that the Green family took £580m out of the company in dividends and other payments. MPs called for Green to be stripped off his knighthood.

2017 Green agreed to pay £363m into BHS pension fund and made a public apology in a joint committee hearing.

2018 Former cabinet minister Peter Hain uses legal protection of the House of Lords to publicly name Green as the businessman behind allegations of sexual harassment, bullyingand racist abuse ; Green categorically denied the allegations. He decamped to Monaco and hired City experts to find a way to turn around the now-struggling Arcadia Group.

Green battled to stave off Arcadia’s collapse before next rental payment on 24 June.

The businessman agreed to pump another £25m into Arcadia ’s pension fund (Pensions Regulator asked for £50m).

Vote on complex rescue deal was postponed when it became clear that some of Arcadia’s landlords – who were being asked to cut their rents by up to 70% to keep the business afloat – were not prepared to support the proposals. If the deal cannot be agreed, Green warned, Arcadia could collapse almost immediately. Green needed support from 75% of creditors on seven different votes.

Lady Green, the official owner of Arcadia, agreed to plough up to £30m into offsetting the impact of rent cuts on landlords in a bid to persuade the revolting landlords to back the rescue deal.

Vote on rescue deal.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Comments

Watchlist

Symbol Last Price Change % Change
AAPL

     
AMZN

     
HD

     
JPM

     
IBM

     

Blockchain in Digital Identity - Discussion at the EU Parliament

From the recent Blockchain For Europe Summit in Brussels: Panel on Digital Identity