The struggles buffeting the U.K.’s apparel retail sector this year are bringing yet another big-name retailer to its knees, with reports that Arcadia Group Limited, owner of high street chains from Topshop to Dorothy Perkins to Miss Selfridge, collapsed into administration—the U.K.’s version of bankruptcy—Monday, according to local British media reports.
Arcadia has not responded to Sourcing Journal’s requests for comment.
Earlier in November, when an initial report from the Sunday Times said that the retail group was considering administration plans, a spokesman for Arcadia said, “It is not true that administrators are about to be appointed.”
However, on Friday, British fashion retail giant said in a statement that it was working on “contingency options to secure the future of the group’s brands” and called in administrators from Deloitte on Monday, The Guardian reported.
In one scenario, Arcadia’s collapse could lead to a selloff of its brands, including Topshop, potentially to competitors such as Asos, Next or Boohoo, all which have more successfully navigated the Covid-19 climate. If a significant portion of the company’s more than 500 stores end up closing, as many as 13,000 employees could be at risk of losing their jobs.
Arcadia Group, owned by billionaire businessman Sir Philip Green, already axed 500 head office employees in July.
Arcadia Group has reportedly been in emergency talks with lenders in a bid to secure a 30 million pound (approximately $40 billion) loan, Sky News reported. Frasers Group confirmed that it offered Arcadia a “lifeline” loan of up to 50 million pounds ($66.7 million) that the latter quickly rebuffed. Frasers Group was not given any reasons for the rejection, nor did they have any engagement from Arcadia before the loan was declined.
Related Stories
Earlier this month, fashion chains Peacocks and Jaeger were placed into administration after owner Edinburgh Woollen Mill Group failed to find a buyer and fell into administration themselves. In October, Frasers was linked as a possible bidder for Jaeger, which includes the Jacques Vert and Austin Reed brands.
Frasers also was connected with a potential saving bid for Debenhams, which has been in limbo for months following its own administration in April. Frasers Group founder and CEO Mike Ashley had put in a bid of $125 million pounds ($166.7 million) but dropped out when the asking price hit $300 million pounds ($400.1 million).
JD Sports is reportedly still interested in buying Debenhams out of bankruptcy, while Marks & Spencer is in the running to acquire some of its locations and The Hut Group is seeking to purchase Debenhams’ website.
U.K. Black Friday store traffic declines 60 percent
Overall, Black Friday store traffic in the U.K. saw a major drop off similar to that in the U.S., with store traffic data and intelligence provider Springboard saying traffic on the shopping holiday dropped 60.6 percent year over year. In the U.S., Black Friday traffic fell by 52.1 percent compared with last year, according to preliminary data from Sensormatic Solutions.
But on a positive note, the week-over-week in-store traffic in the U.K. improved 8 percent on Black Friday even in the wake of the major lockdowns that had been in effect since Nov. 5.
“Footfall activity in U.K. retail destinations last week was clearly influenced by Black Friday, despite severe Covid restrictions across the majority of the U.K. which rendered it even more online focused than in previous years,” said Diane Wehrle, marketing and insights director, Springboard. “For the first time since the last week of the Eat Out to Help Out scheme and the bank holiday in late August, footfall in U.K. retail destinations rose for the second consecutive week from the week before. In addition, the increase in footfall on Friday was nearly double the average increase over the previous five days.”
U.K. government easing operating restrictions
After placing all non-essential retail across England under a second lockdown on Nov. 5, the British government is asking local authorities not to enforce planning restrictions on shop opening times when the lockdown is scheduled to end on Dec. 2.
This would be immediately beneficial for Arcadia, whose stores in Scotland, Wales and Northern Ireland were open during lockdown, though the bulk of its more than 500 locations in England are still temporarily closed.
Communities Secretary Robert Jenrick said that on Dec. 2, all non-essential retail stores in the country will be able to reopen, and rules that limit opening hours will be eased to allow shops to be open for longer stretches from Monday to Saturday. These extended hours will be in effect through Christmas and into January, giving retailers an opportunity to recoup sales.
Restrictions may be imposed by individual local authorities when they grant planning permission for individual stores. Typically, such conditions limit opening hours from 9 a.m. to 7 p.m., for example, unless a separate arrangement is established in writing with the relevant local planning authority.
“How long will be a choice for shopkeepers and at the discretion of the council,” Jenrick said in a statement. “Councils should offer these hard-pressed entrepreneurs and businesses the greatest possible flexibility this festive season.”
Under the new hours, shops could theoretically stay open for 24 hours per day except on Sunday if the local authorities allowed it. Primark already said it plans to open 11 of its stores for 24 hours when they are allowed to open when lockdown is lifted on Wednesday.
Spreading the load by extending opening times is designed to make shopping more accessible and more comfortable, especially given requirements for social distancing in stores. Additionally, Jenrick noted that the move is aimed at alleviating the pressures on public transport.
If councils suspect shops are not upholding the high Covid-secure standards set by the government, they have the power to take action in order to keep the public safe.
“With just over three weeks until Christmas, shoppers will welcome the additional opportunities to shop that the government’s statement supports,” said Helen Dickinson OBE, chief executive of the British Retail Consortium (BRC) in a statement. “Such measures will give more flexibility for shoppers about when and how they shop and we’d encourage everyone to avoid peak times where possible, not leave it all to the last minute and follow all the safety guidelines.”