Arcadia denies break-up plans, says it's focused on turnaround
today Sep 2, 2019
Arcadia could become a thing of the past if a press report at the weekend is to be believed, although the company is denying it outright. A newspaper said that Arcadia boss Sir Philip Green is planning a gradual break-up of his high-street fashion empire as the prospects for turning it around in its current form look weak.
But in response, Arcadia said it has no such plans. “Following the formal completion of the CVA process last week, the board is now fully focused on implementing its turnaround plan across all its brands,” it insisted. “The article in [the] Sunday Times is wholly inaccurate and unfounded. It was written without any attempt to contact the company or any of its advisors.”
The Sunday Times had said that CEO Ian Grabiner would oversee the process but that it wouldn’t be a quick one as the company initially lays the ground work for its brands to function separately by shared functions such as HR and IT being untangled.
It also said that the retail tycoon had been waiting for challenges to its CVA by two American property companies to be resolved before starting the process. This resolution has now happened with an out-of-court settlement agreed last week.
The story said Grabiner, who is a trusted executive who has a long-term association with Green, had convinced the tycoon that the group wouldn't be able to trade its way out of its current problems and that a break-up would be the best way forward. The report also said that the individual brands would be sold off “in a disciplined process” rather than a “fire sale”.
But the big question is whether it might ever happen given Arcadia's firm denial. If the company is separating out some of its functions, this could be for several reasons, although a sell-off plan would be a logical conclusion for people to draw once such a process had started. But we currently have to take the company’s denial at face value and assume that a sale process isn't on the table for now.
Any sale of the separate brands certainly wouldn't be uncomplicated. The company would have a number of stakeholders to take into account and The Pensions Regulator would be one of the most prominent, possessing power of veto over any disposals given the £750 million ‘black hole’ in the group's pension funds. Green had promised the regulator that he will pump up to £385 million into the funds over a three-year period in order to win its support for its CVA back in June.
Breaking up Arcadia would be a seismic move for the UK fashion retail sector as it would involve a business that has 17,000 staff in total with sales of £1.7 billion in its latest financial year.
Copyright © 2019 FashionNetwork.com All rights reserved.