UK’s Retail Giant Arcadia On Cost Cutting Spree
Multibillion dollar retail group Arcadia that owns brands like Topshop and Miss Selfridge recently announced that it will take up an exhausting restructuring exercise in view of challenging retail market. Though job cuts or store closures would likely be a part of its restructuring process but it was also exploring several options to bolster its businesses. Early reports during start of the weekend suggested that owner Sir Philip was considering a voluntary sort of insolvency arrangement that would help to manage cut down on rents and close down un-profitable stores. Though Arcadia stated that a statement was likely to be issued in view of media speculation it did not say anything about sale or company voluntary arrangement or CVA.
Arcadia stated that under current challenging market situation UK retailers in the high street specifically are under tremendous pressure and they like others are exploring options available to operate efficiently. It assured that none of the options involve high number of store closures and layoffs as business will maintain operations as usual and suppliers will also receive payments on time. Though CVA’s can help in cutting down rental bills and linear costs they have potential of starting legal battles like it happened with House of Fraser.
In recent years several high street retail chains have been hit due to weak demand like New Look, Mothercare, Debenhams, HMV and LK Bennett besides the infamous House of Fraser. Last year Sir Philip was criticized for bullying and causing closure of store chain BHS that had been sold for just £ 1 collapsed within a year of sale. The reports about Arcadia working around turnaround plans suggest that it will begin formal discussions with landlords of its stores within a few weeks. For this purpose it has already hired Deloitte advisors in January to explore structuring plans after it faced declining sales and profits.