Arcadia falls into administration putting 13,000 jobs at risk – as it happened

The best hope for Arcadia’s brands to survive is to break the company up, says Chloe Collins, senior retail analyst at GlobalData.

But some brands, such as Topshop, will be in greater demand than others -- and if an e-commerce player such as boohoo buys it, then the stores would probably still close.

Topshop and Topman will undoubtedly attract the most interest from potential buyers. Although their reputation as fashion leaders has dwindled since their heyday, as they have lost market share to more agile young fashion retailers such as boohoo and ASOS, they still have potential and would be missed by those who have grown up with the brands. The boohoo group is likely to be keen to snap them up – Topman would really boost its menswear offer, which has always lagged behind boohoo’s women’s brands, and Topshop could benefit massively from boohoo’s social media prowess and influencer relationships. However, any deal involving boohoo would most likely result in the closure of all stores, and these brands would be sorely missed from high streets. Miss Selfridge could be a good fit for boohoo though, however it would need to be revived with a niche selling point to differentiate it from boohoo’s other brands.

Next and M&S have reportedly shown interest in bidding for some of Arcadia’s brands, particularly Dorothy Perkins and Burton which would have the most appeal among their target demographics. However, Burton’s ranges which mainly focus on formalwear have been largely redundant throughout the pandemic as consumers work from home and social events have been cancelled. Wallis and Evans may find themselves without a buyer as these brands are the most tired and uninspiring. Wallis lacks a unique selling point and also suffers from a focus on workwear, whereas Evans has lost significant as a plus-size specialist as more fashion brands have expanded their ranges to cater to these shoppers.”

Ros Altmann, the former pensions minister, has bad news for Arcadia pension scheme members.

She doesn’t believe that the situation is comparable to the BHS pensions scheme - where Philip Green eventually agreed to pay £363m to cover its deficit, having sold the group for £1.

With the Arcadia scheme, the Green family have already reached a settlement (which is why the Work and Pensions committee are urging the Pensions Regulator to fight for Arcadia workers).

Altmann writes:

This situation is different from the furore which surrounded the insolvency of BHS.

In that situation, the Pensions Regulator had concerns about the lack of funding for the BHS pension scheme over many years and the fact that the business had been offloaded without plans in place to fix the deficit of over half a billion pounds.

In the case of Arcadia, however, the owners have reached an agreed schedule of deficit repair contributions, that was to see £100million paid in over three years, half of which has already been paid. Even if a further £50million is paid next year, as per the guarantee arrangement, the scheme would still not escape the Pension Protection Fund.

As such, Altmann reckons Arcadia’s scheme will end up in the Pension Protection Fund, meaning that many scheme members would lose some of their entitlement.

The sad reality is that Arcadia’s pension scheme is more likely to enter the PPF, reduces most members’ pensions by between 10% and 20%, which will be an added blow to the thousands of workers who may also lose their jobs.

Despite a late wobble, Britain’s stock market has racked up its best monthly gains in over three decades.

The FTSE 100 has surged by nearly 12.4% during November, lifted by the encouraging vaccine trial news from Pfizer, Moderna and AstraZeneca earlier this month, and relief that the US election is behind us.

That’s its best month since January 1989, when it gained 14.2%.

The Footsie had been on track for its best month ever this morning, but stocks suffered a late selloff -- with the index closing down 101 points or 1.6% at 6,266 points tonight.

That’s still a very sharp jump - the FTSE 100 ended October at 5,577 points.

That means the blue-chip index has gained nearly 689 points during November -- the equivalent of £183bn, we calculate, based on today’s prices.

That’s some relief for investors after a pretty torrid year.

European markets also has a sizzling November, with France’s CAC having its best month in over three decades, and Germany’s DAX posting its strongest gains since the aftermath of the financial crisis.

Spain’s IBEX really shone, jumping by a quarter during the month.

ITV News’s Joel Hills has tweeted Arcadia’s letter to Frasers, rejecting Mike Ashley’s offer to lend them £50m.

With Ashley’s offer rejected, and attempts to raise £30m failing last week, Arcadia appears to be running very short of options, and time....

Here is the full letter which Work and Pensions Committee chair Stephen Timms sent to the Pensions Regulator’s CEO, Charles Counsell today, urging him to protect Arcadia’s pension scheme members.

Dear Charles,

I am writing to you following the recent news about the Arcadia Group. During a global pandemic and with many scheme members facing possible job losses, I know that you will agree that the interests of pension scheme members should be front and centre.

Last year you wrote to my predecessor outlining a £385m package agreed between the Pensions Regulator, the Arcadia Group and Lady Green. This included a £100m guarantee from Lady Green, annual payments of £25m from the Arcadia Group and additional asset security.

I would be grateful if you would be able to answer the questions below:

• Your letter of 3 July to the previous Chair of the Committee stated that “the £100m is guaranteed to be paid regardless of what happens to AGL in the future”. Given that it now seems that Arcadia Group Limited is unable to make any further deficit reduction contributions to the scheme, when would you expect this guarantee to be paid?
  
  
• Have the deficit reduction contributions of the Arcadia Group schemes been affected by the guidance you introduced for defined benefit schemes funding and investment during the Covid-19 pandemic?
  
  
• The agreed package included assets secured for the scheme valuing £210m. I understand that the Pensions Act 2004 will limit your ability to comment on the additional asset security, but are you able to give us any indication of what assurances scheme members will be given on when and if these assets will be transferred to the schemes?
  
  
• What lessons will you be applying from the Regulator’s experience with the BHS schemes?

My Committee is currently taking evidence on pension scams. We have heard how scammers exploit member uncertainty to access people’s savings. In a time of near unprecedented uncertainty, how will you be applying the lessons of the Rookes Review to ensure that Arcadia scheme members are not tempted to put their savings in the hands of fraudsters?

Finally, you published your guidance on defined benefit superfunds earlier this year. What reassurances are you able to give to scheme members should the strength of that guidance be tested in the coming weeks?

I look forward to hearing from you.

Yours sincerely,

Stephen Timms

Dr Gordon Fletcher, of the University of Salford Business School, says that Arcadia - and its staff - are paying the price for Philip Green’s reluctance to invest in its brands amid the move to online shopping.

Arcadia is personalised around its chairman, Philip Green. This is a textbook case study into the impact that different styles of leadership and management can have on a business. Arcadia’s brands have been slow to diversify into other countries or to make an exciting online offering - although Topshop’s 80% discounting on Cyber Monday is a headline in its own right - and have not kept pace with the contemporary fashion offerings of the online-only competitors.

“As a private company the focus appears to have been on the short term by reaping of dividends during profitable periods with no investment back into the brands themselves. Consumers do increasingly expect conversations and interaction with the brands that they want. If that investment has not been made to let that conversation happen then loyal consumers will look elsewhere. Arcadia and its brands are now paying the price for this lack of focus on the consumer and its ability to keep pace with the changing expectations of retail.”

Getting back to Arcadia, and the Money Advice Service have tweeted some information for customers.

This includes:

• Take back any unwanted good, or returns, as soon as possible, and avoid buying gift cards, just in case.
• Keep paying off any store credit cards - missed payments still affect your credit rating
• Spend gift vouchers as soon as you can - as they would be a low priority in an administration

In other non-Arcadia news, president-elect Joe Biden has officially nominated former Federal Reserve chair Janet Yellen as the next US Treasury Secretary.

Economists have predicted that Yellen will work closely with the Fed to push through more stimulus measures to support the US economy, which could have a positive knock-on impact on other economies.

That’s also likely to weigh on the dollar, which has hit a two and a half-year low today (just as bitcoin hits that record high).

Yellen seems to have a new Twitter account too, where she’s promising to help rebuild the American dream....

Back in the markets, cryptocurrency bitcoin has just surged to a new alltime high.

After slumping late last week, bitcoin’s rocketed by around 16% today to a new high over $19,800 (up from around $17k on Friday night).

That takes bitcoin over the previous record in December 2017, just before prices crumbled

Supporters insist that this time it’s different, given some institutional investors are now backing bitcoin, as are services such as Paypal. Plus, with governments having to spend hugely on the coronavirus crisis, cryptocurrencies could provide protection against inflation....

Mike Ashley’s Frasers Group have just confirmed that Arcadia has rejected its offer of a £50m emergency loan.

In a brief statement to the City, Frasers says the proposal of a ‘lifetime loan’ was declined without any engagement:

Frasers Group can confirm that Arcadia Group Limited have declined Frasers Group’s offer of a lifeline loan of up to £50m.

Frasers Group were not given any reasons for the rejection, nor did Frasers Group have any engagement from Arcadia before the loan was declined.