the times | Wednesday December 2 2020 1GM 39
Business
High streets need a
higher purpose
B
ad news doesn’t always
shock. Debenhams was
already in a “trading
administration”. Now it’s
even more bust: heading
for liquidation, break-up and the
likely closure of many of its 124
stores. Just a few hours, too, after
Sir Philip “Effing” Green’s Arcadia
rag-bag keeled over.
And, of course, it’s terrible for
Debs’ 12,000 staff and the 13,000 in
the errant knight’s Topshop-to-
Dorothy Perkins combo. But don’t
blame Covid-19 for this. It’s just
accelerated the inevitable. Both
businesses have been imploding for
years — and for similar reasons. It’s
the bigger picture that counts. How
much proof does the government
need that Britain has far too many
shops and zero strategy to stop a
glut of ghost towns?
Boris Johnson bangs on about an
“infrastructure revolution”. But
there’s little infrastructure that
people care about more than their
local high streets. Yet governments
and local councils have allowed
them to be hollowed out. And
chiefly by three things. First,
unscrupulous retailers. Second, a tax
and business rates system that’s
given Amazon a free hit. Third, an
obsession with shopping-centric
public spaces. Won’t the virus at
least be some sort of wake-up call?
As Sir Phil proved first with BHS
and now Arcadia, he has no rivals
when it comes to buying companies
on the cheap, stripping out the
property, paying a £1.2 billion
dividend to his missus in Monaco
and then bobbing about on his boat
while the over-geared, under-
invested business sinks. Yet the
former private equity owners of
Debenhams — CVC, TPG and
Merrill Lynch’s buyout wing — run
him quite close.
They bought the department
stores group in 2003, injecting just
£600 million of equity into the
£1.8 billion deal. On the watch of ex-
boss Rob Templeman, they then
geared it up via a 35-year sale-and-
leaseback of the stores and pocketed
the £1 billion-plus proceeds. They
then brought Debs back to market
via 2006’s £1.7 billion float. From day
one, it bombed.
Still, they trebled their money.
And, unlike Sir Philip, at least Debs’
crew had the sense to get out long
before it went kaput. So it was for
others to discover the joys of taking
on the online department store,
Amazon, with a business saddled
with £1.2 billion debts and millstone
leases. And there have been similar
goings-on in much of UK retail.
Others simply soldier on after
endless financial revamps: New
Look, say, or Peter Simon’s
Monsoon Accessorize group.
But for how much longer?
Already this year, as the Usdaw
union noted, more than 200,000
retail jobs have gone, with 20,000
store closures. The pandemic has
cranked up the shift to online.
Peacocks, Jaeger, TM Lewin,
Warehouse and Oasis have already
gone bust. Ditto shopping centre
outfit Intu.
Yes, new retailers will spring up.
But the high street is being
eviscerated while the government
faffs around with business ratesreviews. And even a big cut or
taxing Amazon will only go so far.
To bring back high street footfall,
shops need to be repurposed into
something more useful: housing,
teaching centres, arts, sports or
entertainment venues. And councils
and landlords should be incentivised
to do it. The collapse of Debs and
Arcadia is a tale of two dinosaur
businesses laid low by greed. But
surely the government can’t miss
the bigger story.Green’s knightmare
S
till, at least business secretary
Alok Sharma has produced one
stupendous contribution to the
issue: a five-point Twitter thread on
Arcadia falling over. It includes a
warning to Sir Philip Greed that
he’ll be “keeping a very close eye”
on the administrator’s report to the
Insolvency Service. Meantime,
Michael Gove broke off from his
Scotch egg routine to mutter about
“missteps” in the management.
The hint? That Green must
ensure the £350 million pension
hole gets filled. He should, too. But
you can see why he thinks there’s a
different law for him and other
owners of failed businesses. Look at
schemes in the Pension Protection
Fund. Alongside Carillion, Thomas
Cook and MG Rover, there’s
retailers House of Fraser, Allders,
Focus DIY and the UK Toys R Us.
Did their owners cough up? Don’t
be daft. Yet Toys R Us was owned
by three buyout firms — KKR, Bain
and Vornado Realty Trust — even
richer than Green. And, though it
was dragged out of him, he did
stump up £363 million over BHS.
So what’s the difference? In short,
his knighthood, awarded by Tony
Blair. He was almost stripped of it
over BHS, after trying to offload its
£571 million pension deficit on to
wrong-un Dominic Chappell. He’d
have lost it, too, if a US judge had
ruled against him over the sex
assault charges he denied.
The honours forfeiture
committee, which ironically
includes ex-Debenhams chairman
Sir Ian Cheshire, has only ever
taken away one business gong: Fred
Goodwin of RBS fame, though ex-
HBOS chief James Crosby gave his
up. Few like theirs as much as Sir
Philip “Effing” Green. If he wants to
be sure of keeping it, he can’t leave
Arcadia’s pensioners worse off.Time to ante up
I
t’s D-day for Stéphan Crétier, the
Gardaworld boss. He’s said he’s
not going to lose the £3 billion-
plus bid for G4S. And he’s offered
his advisers up to £312 million in
success fees. So, with the shares
closing last night at 229p, his 190p-
a-share offer has long looked daft.
To boot, under takeover rules it’s
his last chance to raise his bid —
unless rival Allied Universal turns
its mooted offer into a real 210p bid
or something better. Gardaworld
needs to put down serious money.
Around 225p cash would give G4S
investors plenty to think about.business commentary Alistair Osborne
Footfall to UK
high streets last
weekend down
68.9%
Non-food online
sales account forof the market in
October (pre-second
lockdown) versus
31.7 per cent in
October 201942.3%
UK shop
sales fell byduring first
lockdown of
three months to
end of May50.3%
Lost Retail
sales this year£17.28bn
Estimated retail
job losses in 2020235,704
Estimated store
closures in 202020,620
(Centre for
Retail Research)Dorothy
Perkins EvansMiss
Selfridge Outfit Topman Topshop WallisArcadia
total Debenhams Total5 4 2 2 2 3 2 1 0
0
0
1
1
0 0 1 1 2 0 1 1 2 2 1 1 0 1 1 2
0
1
0
0
8 1 2 1 2 2 1 1 1 1 1 1 1 2 0 0
1
1
0
0
2 2 0 0 0 0 0 0 0 0 0 0 0 0 1 0
0
0
1
0
8 6 2 1 2 1 1 2 2 1 1 1 1 1 1 1
2
1
1
1
2 0 2 0 0 1 1 0 0 0 0 0 1 0 0 0
0
1
0
0
1 0 1 1 0 1 1 0 0 0 0 1 0 0 0 0
0
0
1
1
1 0 0 0 1 0 0 0 0 1 0 0 0 0 0 0
1
1
1
1 0 1 1 1 1 1 1
19
148 8 7 7 6 5 4 4 4 4 4 3 4 4
4
4
5
5
27
1510
9 9 9 7 6 5 5 5 5 5 5 4 4
5
5
5
5
Stores across UK
the high street, although Simply Be, a
rival, is online-only. One retail analyst
said that the so-called “body positivity”
trend could see Evans revived. “Like all
of Arcadia’s brands, this would require
some actual investment put into the
business,” the analyst said.
Foschini, the South African invest-
ment firm that owns Whistles, Hobbs
and Phase Eight, has been tipped as an
interested bidder.
While turnaround firms including
Alteri and Opcapita have been put in
the frame as potential buyers, it is
thought that they would struggle to
compete if there was interest from a
retailer that already has an online plat-
form to plug the brands into.burton
2005 sales................................. £188.6 million
2020 sales...................................... £59.1million
Stores.....................................................................45
The menswear brand has had an even
tougher year than its womenswear
stablemates. Sales of suits and formal-
wear have tumbled since the start of the
pandemic as people have dressed more
casually while spending time at home
during lockdowns. Burton’s route to
survival is also less clear because there
are few remaining high street men-
swear retailers around to pick off com-
petitors. Moss Bros, which was taken
private in June and last week filed for a
restructuring, is now owned by Michael
Shina, who also controls Crew Cloth-
ing. One source said that the pandemic
had meant there was “enough to be
getting on with” before taking on
another struggling fashion brand.*All figures estimated by Global Data
and the Local Data Companybought a 25 per cent stake for £350 mil-
lion in 2012, which valued the business
at $1.4 billion. The investor sold its stake
back to Arcadia for $1 last year
before a severe restructur-
ing.
Boohoo, the online
fast-fashion retailer,
has been widely
tipped as the most
likely buyer for
the business. It
already has a track
record of buying
high street brands,
including Coast, Oa-
sis, Warehouse and
Karen Millen, and turn-
ing them into online busi-
nesses. This scenario would re-
sult in the majority of Topshop’s stores
shutting. Administrators are still hop-
ing to find a buyer that would want to
keep some of its stores open to maxi-
mise the amount for creditors. Asos, an
online fashion retailer, is not interested
in making a bid for the business, despite
selling Topshop items through its web-
site.dorothy perkins
2005 sales................................. £188.6 million
2020 sales.....................................£59.1 million
Stores....................................................................131
Dorothy Perkins is still one of the high
street’s favoured brands, but for how
long? Marks & Spencer has recently
taken a different approach to adding
third-party brands into its stores
through collaborations with Nobody’s
Child and Ghost and it is weighing a
rescue of Jaeger and Austin Reed.
Sources said it was unclear whether
Dorothy Perkins would bring anythingnew to Marks & Spencer’s ranges and
played down its interest in the brand.
Industry sources said that it would
make more sense for Next to
buy Dorothy Perkins, and
possibly swoop on more
Arcadia brands,
because it has
already shown a
willingness to put
concessions in its
larger stores and
sells Dorothy Per-
kins items through
its Label website.
Tesco, Britain’s big-
gest supermarket, is
another potential bidder
as it has 30 Dorothy Perkins
concessions in its largest Extra
stores.evans, wallis,
miss selfridge2005 combined sales.........£395.4 million
2020 combined sales......... £150.4 million
Stores......................................................................31
Potential buyers for Arcadia’s other
labels include Torque Brands, the
investment vehicle set up by Allan
Leighton, the Co-op chairman, and
James Cox, the founder of Simba Sleep.
Mr Leighton, who once worked with
Sir Philip at BHS, tried to buy the
department stores chain in 2007 and
again when it collapsed in 2016. Torque
Brands bought TM Lewin in May and
turned the shirt manufacturer into an
online-only brand.
One industry source said that while
Miss Selfridge still appealed to young
customers, Evans could be an attractive
option for an online retailer. The plus-
sized retailer has little competition on$1 last year
uctur-ne
,- nd
urn-
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o would re-
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make more s
buy Doro
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