Topshop parent Arcadia Group has been given a lifeline by its creditors and landlords after a Company Voluntary Arrangement (CVA) was approved on Wednesday.
The vote was delayed last week after it became clear it would not gain the 75 per cent approval needed to proceed. However it appears a change of heart by the pension regulatory body secured the arrangement.
Arcadia Group is now free to close a further 23 stores and will receive reduced rent on nearly 200 others.
CEO Ian Grabiner said he is confident about the group’s future now the deal has been accepted, promising to provide customers “with the very best multi-channel experience, deliver the fashion trends that they demand, and ultimately inspire a renewed loyalty to our brands that will support the long-term growth of our business”.
“After many months of engaging with all our key stakeholders, taking on board their feedback, and sharing our turnaround plans, the future of Arcadia, our thousands of colleagues, and our extensive supplier base is now on a much firmer footing,” he said.
“From today, with the right structure in place to reduce our cost base and create a stable financial platform for the group, we can execute our business turnaround plan to drive growth through our digital and wholesale channels, while ensuring our store portfolio remains at the heart of our customer offer.”
However Chloe Collins, senior retail analyst at GlobalData, said that although Arcadia’s CVA has been approved, it is not surprising it faced backlash from some landlords who have doubts about the retailer’s future.
“[Arcadia]’s leading brands – Topshop and Topman – still have a strong following among millennials, however many of the other, such as Miss Selfridge and Dorothy Perkins, are now irrelevant in a highly saturated market and chances of revival are slim, leading landlords to question whether other retailers could offer their spaces more longevity,” she said.
“The decision to add Topshop and Topman to Asos’ branded offer as part of Arcadia’s turnaround plan is wise to increase the brand’s reach, especially internationally. However it is crucial that the £60 million invested into advancing Arcadia’s digital platforms includes competitive and convenient delivery methods to rival Asos and maintain traction on the brand’s individual sites.”
Collins said the £75 million invested by Green into its physical stores will be too thinly spread as even after the planned closures Arcadia will have around 500 stores left.
“These stores have been neglected for far too long and are now unable to match competition which moves in favour of experience-led shopping.”
This story originally appeared in Inside Retail Asia.