Section:GDN 1N PaGe:43 Edition Date:190907 Edition:01 Zone: Sent at 6/9/2019 18:25 cYanmaGentaYellowbl
Saturday 7 September 2019 The Guardian •
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FTSE 100 All share Dow Indl Nikkei 225 £/€ £/$
1.2314-0.0013 -0.0010Fears over future
of Green’s retail
empire after loss
of £177m reported
Sarah ButlerSir Philip Green ’s retail empire is facing
“material uncertainty” about its abil-
ity to continue trading after slumping
to a £177.3m loss last year.
Taveta Investments, the owner
of Arcadia Group, whose high street
brands include Topshop, Miss
Selfridge, Wallis and Evans, said dif-
fi culties in refi nancing a £310m loan
on Topshop’s Oxford Street store, due
to expire in December, could mean it
would have to raise new funds.
It also warned that “diffi cult trad-
ing conditions”, particularly in the
event of a no-deal Brexit, might leave
it without suffi cient cash to deliver its
three-year rescue plan. Green’s retail
empire staved off collapse in June after
winning backing from creditors for arescue plan that involves the closure
of about 50 stores, 1,000 redundancies
and rent cuts of up to 50%.
The slump into the red was revealed
in the latest accounts, which were pub-
lished at Companies House yesterday.
Taveta said: “There are certain sce-
narios that could arise in the event of
continued challenging and volatile
market conditions in the retail sec-
tor, including a disorderly exit from
the European Union, that would create
uncertainties around the ability of the
group to operate within the liquid-
ity available from existing funding
arrangements.”
This was underlined in a similar
statement by Taveta’s auditor, Paul
Cragg at PricewaterhouseCoopers,
who noted “a material uncertainty
which may cast significant doubt
about the group’s and company’s abil-
ity to continue as a going concern”. Theaccounts cover the year to 1 September
2018, but both statements are dated
30 August 2019, indicating that fears
for the company’s future persist even
after agreement on the rescue plan.
Since then, the group’s interim
chairman Jamie Drummond Smith,
a restructuring expert who was hired
to replace Karren Brady , has stepped
down. The company is searching for
a replacement.
Sales slid 4.5% to £1.8bn over the
year, including a 5.2% fall in the UK
and an 11% slump in the US division,
which has now been put into admin-
istration. The group fell into the red
by £177.3m after hefty one-off costs of
almost £217m, mostly relating to leases
on loss-making stores. In the previous
year the group made a profi t of £53.5m.
One-off costs also include more
than £11m in provisions against debts
and termination payments relating to
Topshop’s Ivy Park clothing joint ven-
ture with Beyoncé, which the singer
took sole control of last year.
Chloe Collins, senior retail analyst
at industry consultancy GlobalData,
said the sales fall was the result of
“decreased desirability of ranges
and a lack of relevance in a compet-
itive market”. She said Topshop was
devaluing its brand with heavy dis-
counting and needed to increase its
products’ appeal.
The business troubles come aftera diffi cult year for Green. He is facing
charges of inappropriately touching
a US pilates instructor and has been
accused of bullying UK staff. Green has
denied any unlawful behaviour.
Despite the losses, the accounts
show that Green’s Monaco-based
wife, Tina, the owner of Taveta , was
paid more than £23m last year. Taveta
redeemed £20m of loan notes and
paid interest of nearly £3.4m relating
to the purchase of BHS from the fam-
ily in 2009.
The Green family was owed a
further £43.4m in relation to BHS,
which collapsed in 2016 shortly after
Green sold it for £1, but the accounts
show that this debt has now been
written off.
Tina Green has also lent Taveta
£50m and agreed to invest £50m of
new cash to help with its turn around
plans. She was forced to pump £100m
into Arcadia’s pension scheme over
three years to win support for Arcadia’s
restructuring plan from the Pensions
Regulator and the group’s pension
fund trustees.
Arcadia itself has put an additional
£285m contribution in property assets
and cash payments into the scheme.
That comes after the Green fam-
ily collected more than £1.5bn from
Taveta since 2005, including a £1.2bn
dividend and at least £356m in inter-
est, rent and property deals.
Taveta’s highest-paid director
enjoyed a pay rise despite poor trading
at the group. The unknown execu-
tive’s remuneration rose to £1.9m from
£1.8m a year before.▲ The Topshop store on Fifth Avenue
in Manhattan, New York. The US
division is now in administration
PHOTOGRAPH: RICHARD LEVINE/ALAMYArcadia’s rise and fall
When Sir Philip Green bought
Arcadia, the retail group behind
brands such as Topshop and Wallis,
for £850m in 2002 he was already
known as king of the UK high street.
Green made his fortune by
breaking up Sears, the group that
once owned the Freemans catalogue
and Miss Selfridge, before buying
BHS in 2000. The Arcadia deal
enlarged the empire considerably.
But in 2006 the Topshop supremo
Jane Shepherdson , who put the
brand on the fashion A-list, left
amid rumours she was unhappy
with Green’s management style.
In 2012 the US private equity fi rm
Leonard Green bought a 25% stake
in Topshop for a reported £350m.
But Topshop and Arcadia’s other
brands were slow to adapt to online
shopping and faced competition
from cheaper rivals including Asos,
H&M and Primark. The group’s
pension defi cit rose as sales fell. The
collapse of BHS in 2016, shortly after
Green sold it to a serial bankrupt ,
also dented his reputation.
This year Arcadia bought back
Leonard Green’s stake in Topshop
for virtually nothing. The group also
warned it could collapse if landlords
did not back a rescue deal involving
store closures and rent cuts. They
agreed to the plan, with the Green
family pledging to invest large sums ,
but problems remain. Sarah Butler‘Material uncertainty’
Taveta
InvestmentscontrolsSource: Taveta accountsownsTina Green owns all
the family shares in
Taveta InvestmentsPhilip Green is on
the board of TavetaTaveta results
12 months to
1 September 2018
£1.8bn sales (-4.6%)
£177.3m loss
18,000 staff
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