The Times - UK (2020-12-02)

38 1GM Wednesday December 2 2020 | the times

Business

fifteen in Glasgow, ten in Manchester

and nine in Birmingham, research by

the Local Data Company and Altus

Group has found.

Smaller towns such as Barrow-in-

Furness and Bedford face being left

without any big retailer at all. M&S and

Arcadia have closed stores in Bedford

in recent years.

Mohammad Yasin, Labour MP for

Anchors away

Big retail casualties in 2020

Stores Jobs

Debenhams

124

12,000

440

13,000

Arcadia

499

4,447

Peacocks and Jaeger

529*

2,300

Oasis and Warehouse

*Includes 437 concessions

London

Burton

Menswear

Glasgow

Manchester

Birmingham

Leeds

Sheffield

Stoke-On-Trent

Hull

Gateshead

(inc Metrocentre shopping centre)

Greenhithe

(inc Bluewater shopping centre)

Basildon

Brierley Hill

(inc Merry Hill shopping centre)

Bristol

Liverpool

Nottingham

Swansea

Uxbridge

Chester

Aberdeen

Leicester

0 2 0 3 0 1 0 1 0 0 1 0 1 0 0 0

1

0

0

1

Which stores

will avoid

being left on

the shelf?

Sir Philip Green’s retail empire has

crumbled and Deloitte, his long-term

adviser, has the task of overseeing a fire

sale of Arcadia’s brand. While Mike

Ashley’s Frasers Group has already

publicly expressed an interest in buying

the whole business, it is widely thought

that Sir Philip could not bear to do a

deal that would hand control to the

sparring partner he used to call

“Little Emp”. A dismantling of Arcadia’s

brands is the most likely outcome, but

some are in better shape than others.

topshop / topman

2005 combined sales* ...... £636.9 million

2020 combined sales............ £424 million

Combined stores..........................................149

Considered to be the jewel in Arcadia’s

crown, Topshop and Topman were

once one of Britain’s most fashionable

brands. It is the asset that adminis-

trators at Deloitte will try to get the

highest bid for.

The value of Topshop is unclear,

though, with industry commentators

agreeing that the chain has been

starved of investment. Leonard Green,

an American private equity firm,

Ashley Armstrong Retail Editor

1

A fire sale by Debenhams is

expected to fuel a “Wild

Wednesday” rush on the high

street today as most retailers

reopen for the first time in a

month. The 242-year-old

department stores chain will offer

shoppers up to 70 per cent off after

going into liquidation. About

25,000 jobs have been put in

jeopardy in only two days after

Sir Philip Green’s Arcadia filed for

administration. Pages 1, 37-40

2

There are not enough trained

customs agents to handle a

surge in demand caused by

Brexit. This could result in up to

100 million consignments being

sent across the border without

paperwork or being left waiting in

depots to get clearance. Page 2

3

Investment banks advised

their clients to buy British

shares again as world stock

markets rallied, fuelled by

optimism that Covid-19 vaccines

will get the economy back on

track by the end of spring next

year. Pages 37, 49

4

Caffè Nero could face a legal

challenge to pursuing a

company voluntary

arrangement, despite backing from

creditors. Under insolvency law,

creditors can challenge such a

restructuring within 28 days.

Lawyers for EG Group, whose bid

was rebuffed, have written to

highlight the strong possibility of a

landlord revolt. Page 37

5

Gardaworld is set to increase

its takeover offer for G4S by

at least 15 per cent, raising the

hostile bid for the security

company from 190p a share to

220p or more. Today is the 46th

working day after the original

offer of almost £3 billion and the

last day on which a bidder can

submit a revised proposal. Page 42

6

Economic recovery in Britain

next year will be among the

slowest in the world. The

Organisation for Economic Co-

operation and Development

expects global GDP to return to its

late 2019 level by the end of 2021,

but the UK will remain more than

6.4 per cent smaller. Page 42

7

House prices rose by 6.5 per

cent year-on-year in

November to an average of

£229,721, up on the 5.8 per cent

growth in October, Nationwide

Building Society said. Page 43

8

The outgoing chief executive

of Lloyds Banking Group will

walk straight into a new job as

chairman of Credit Suisse.

António Horta-Osório will leave

London in April and will move to

Zurich. Page 45

9

The price of copper rose to

fresh seven-year highs

yesterday as analysts said that

the price could reach $10,000 a

tonne by 2022. The red metal

traded above $7,700 a tonne on the

London Metal Exchange, having

risen as high as $7,723. Pages 47, 48

10

An old blockbuster anti-

cholesterol drug has been

sold by Astrazeneca. The

Anglo-Swedish drugs company

has agreed to sell the rights to

Crestor in more than 30 countries

in Europe, excluding British and

Spain, to Grünenthal, of Germany,

for up to $350 million. Page 47

Need to know

Big chains’ downfall

raises awful spectre

of new ghost towns

For residents of Barrow-in-Furness,

the collapse of Debenhams signals the

closure of the town’s last large, big-

name high street shop — and the end of

an era.

The store attracted 2,000 shoppers

when it opened with great fanfare in

1997 as part of the Portland Walk

development, according to The Mail,

Barrow’s daily paper. There were 2,397

applications for the store’s 150 jobs and

the opening ceremony featured five

local mothers.

“People have an attachment to the

shop and have supported it really well

in the past,” said Sandra Collings, 63,

owner of Cumbria Sewing, a needle-

craft haberdashery that she set up 33

years ago. “Losing anything major like

that will have a massive effect on foot-

fall and we are all worried. It is the only

real major chain that we’ve got.”

Marks & Spencer has left already and

the town lost a Topshop and a River

Island in the summer. Deprivation is a

challenge for some areas of the

borough, which have suffered from

economic decline and face problems

such as unemployment, poor housing

and lower-than-average life expec-

tancy. The economy is largely sup-

ported by BAE Systems, which builds

nuclear submarines and other arma-

ments at its shipyard in the town, and

the NHS.

“It’s going to have a huge impact,”

Colin Garnett, 44, manager of the local

business improvement district, said.

“Losing your anchor store is devas-

tating to the retail core of the town

centre. [The store] was typical of the

1990s, when high street shopping was at

its height and these units were built for

purpose, but perhaps now that purpose

has changed.”

The sense of concern is reflected

nationwide, with fears over the spread

of “ghost towns” being exacerbated by

the closure of anchor stores such as

John Lewis, M&S and Debenhams.

The collapse of Arcadia, which owns

the Topshop, Evans and Miss Selfridge

fashion brands, adds hundreds of stores

to the total at risk of closure this year. Its

total store portfolio spans the equiva-

lent of 46 Premier League football

grounds, according to Altus Group.

London has the largest number of

Debenhams and Arcadia stores at risk,

with twenty-seven outlets, followed by

Bedford, said: “It’s another blow to our

once-thriving town and is devastating

news for the staff.”

Many towns were suffering from

store closures before the pandemic.

Martin Shipley, 52, who runs Who-Ray,

a gift shop in Stockton-on-Tees, Co

Durham, said that when the town lost

its Debenhams a year ago a “mood of

unease” spread among retailers. “As a

small trader it was very scary. Deben-

hams was a large building and a good

anchor here for a hundred years. When

something like that fails, you wonder

what is going wrong.”

There is hope that the decline of big

brands is spurring the revival of

independent retailers. The pandemic

contributed to the net loss of 1,833 inde-

pendent shops, cafés and high street

businesses in the first eight months of

the year, compared with 6,001 chain

stores. The Local Data Company,

which carried out the research, said

that independent operators were more

agile, had a lower cost base and a better

understanding of their local areas.

Sir Richard Leese, leader of Man-

chester city council, said: “The era of

economic activity being underpinned

by major chain retailers is diminished. I

think we’ll start to see a growth of more

independent businesses. It’s going to

change some of the economic equa-

tions, but we’re already beginning to

see that now in new developments.”

Kevin Kavanagh, 66, who runs a cof-

fee shop and wine merchant in Bedford,

said he was optimistic that the develop-

ment of a café society would continue

to bring people into the town centre. “I

think we’ll trade off of other things that

are happening in town,” he said.

Martin Davies, 59, chairman of the

Bournemouth town centre business

improvement district, said that the loss

of its Debenhams would have a “major

impact”, but it was “inevitable almost

because of the changing nature of retail

and consumer spending, which was

already in process prior to this year.

“I think ultimately the hope for town

centres everywhere is some of the

redundant retail becomes converted to

accommodation and we have more

people living in town centres support-

ing a more varied high street.”

Ms Collings said that she had moved

her haberdashery in Barrow from a side

street to the high street. “I hope that

other independents will do the same.

It’s the only thing that can happen, or

we’re in real trouble.”

Creditor changes ‘risk company rescues’

The return of HM Revenue & Customs’

preferential status when companies go

bust will “scupper” a business rescue

process that helped to save thousands

of jobs during the Covid-19 pandemic,

insolvency experts have warned.

Company voluntary arrangements

are expected to be used less often after

the partial return of “crown preference”

yesterday, whereby certain tax debts

move up the repayment queue in

insolvency cases. VAT and payroll

taxes now have priority over “floating

charge” creditors and unsecured cred-

itors, such as suppliers and pension

funds. A company with large tax debts

is now less likely to secure a CVA, since

returns to unsecured creditors may be

too low for them to agree to the process.

Tim Symes, a specialist in insolvency

at Stewarts, a law firm, said that the tax-

man could insist on being paid in full in

a proposed CVA, meaning that the plan

“could instantly become dead in the

water. HMRC will have gouged out

such a large share from available assets

that it won’t be worth unsecured

creditors supporting it.

“If HMRC ignore it, then the whole

point of a CVA — being to get a

breathing space from creditors — is

defeated.”

Damian Webb, a partner at RSM

Restructuring Advisory, also warned

that the policy would “severely con-

strain restructuring options”.

Mr Symes added that the govern-

ment should heed calls from R3, the in-

solvency trade body, which has asked

for crown preference to be suspended.

The Enterprise Act 2002 ended

HMRC’s original preferential status.

Experts said its revival had been driving

insolvencies in recent weeks as lenders

sought to have processes under way

before the new rules came into force.

James Hurley Enterprise Editor

Louisa Clarence-Smith, Tom Ball

Ben Martin Behind the story

T

he decline of the

department store poses

a challenge for property

owners burdened with

large vacant units

(Louisa Clarence-Smith writes).

Some, including the owner of

Westfield in Shepherd’s Bush,

west London, plan to convert

parts of empty former

department stores for non-retail

use, such as co-working space.

John Lewis has planning consent

to transform almost half of its

Oxford Street store into office

space to cut costs and provide a

new customer base.

Kathryn Wood, a partner at

Cushman & Wakefield, a

commercial property services

firm, said that developers also

were considering turning stores

into health centres, student

accommodation and “dark

kitchens” used to fulfil demand

for online food deliveries.

She said that the department

store had been replaced as an

“anchor” to a development by

restaurants, gallery spaces and

“competitive socialising”

businesses such as Flight Club,

the social darts operator.

Chris Oglesby, 53, chief

executive of Bruntwood, the

property company redeveloping

two shopping centres in Trafford,

Greater Manchester, said that

Debenhams stores had “huge

potential”. He said the decline in

rents had made it viable to

provide alternatives to shopping

that would bring communities

together. “The classic one is

putting together an attractive

food and beverage proposition

that attracts people from all

demographics,” he said.