Sir Philip Green’s retail empire Arcadia will shut almost two dozen stores and slash up to 500 jobs as part of a restructuring plan revealed today.
The high street stalwart said it has launched seven company voluntary arrangements (CVA) as part of a desperate plan to turn around its ailing fortunes amid torrid trading conditions.
Arcadia has identified 23 of its 566 UK stores for closure and has requested rent reductions and new lease terms on almost 200 more in a move that puts 520 jobs at risk.
Tina Green, Sir Philip's wife, will invest £50m into Arcadia and hand over a 20 per cent share in the company to any affected landlords, who will also be able to claim against a £40m pot.
Arcadia, which owns high street chains such as Topshop, Burton and Dorothy Perkins, last month drafted in two top restructuring experts to its board to conjure up a rescue plan after the firm suffered a slump in sales.
Under the proposals, the firm will cut its annual pension scheme contributions from £50m to £25m over the next three years, but Green has pledged to inject £100m into the fund to cover the shortfall.
Green and his wife lost their billionaire status earlier this year, falling from joint 66th to 156th on the Sunday Times rich list.
“Following constructive discussions with all key stakeholders, we believe that a CVA is the best course of action to reduce our fixed cost base and ensure we can continue meeting our commitments to pension trustees, staff, creditors and our extensive supply chain for the long term, while continuing to serve customers through our portfolio of quality fashion brands,” said chief executive Ian Grabiner.
Arcadia said it will also wield the axe on its American business, shutting all eleven of its Topshop and Topman stores in the US and maintaining only an online and wholesale presence in the country.
“Arcadia and its portfolio of iconic fashion brands have faced unprecedented market conditions in recent years, which have significantly impacted the group’s financial performance,” said Daniel Butters, partner at Deloitte.
“These CVAs will provide a stable platform for Arcadia’s experienced and committed leadership team to implement its turnaround plan and ensure the long-term sustainability of the group.”
The proposals are subject to creditor approvals at meetings scheduled for 5 June. Arcadia said all its UK and Irish stores will remain open during this period.