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Arcadia Group Demands Bigger Discounts from Suppliers

It looks like fashion retail behemoth Arcadia Group, owner of the Topshop and Topman chains, wants to make up for falling pre-tax profits—which dropped by five million pounds, or about $7.75 million in the year ended August 30—and its director’s recent 38 percent pay rise by imposing strict payment terms on its suppliers.

The British holding company, controlled by billionaire tycoon Sir Philip Green, wrote to suppliers this week to say it plans to slash what it’s willing to pay for orders that manufacturers have already agreed to fulfill.

Arcadia already asked some suppliers for a 14.25 percent discount on its invoices. According to an e-mail obtained by the Daily Mail, chief executive Ian Grabiner wrote, “We are notifying you of a further 2 percent payment discount—this will be effective from September 1, 2015 and will apply to all existing orders with a payment date due after August 31, 2015, as well as to all orders going forward,” noting that the additional discounts are intended “to help mutually grow our business together.”

But suppliers and small business groups alike aren’t happy about it. One supplier told the Mail, “We have no choice but to stomach this. If we turn it down, we won’t get orders next time.” The Forum of Private Business, meanwhile, has said Arcadia is putting jobs on the line and curbing companies’ ability to grow.

Arcadia’s decision spotlights how some suppliers are struggling to stay afloat while faced with rising costs and increased competition. A Lloyds Bank report released Wednesday found that nearly one third of British businesses are expecting corporate buyers to defer payments this year.