Arcadia Group (UK)

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Arcadia Group is the UK's #2 clothing retailer (behind Marks & Spencer), home to a collection of seven chain store brands led by Topshop and Burton. Known until the beginning of 1998 as Burton Group, the business has changed shape several times since its original heyday in the 1980s. After performance slumped in the 1990s, Burton went on a crash diet, spinning off several brands including department store Debenhams to create a leaner and more focused group. In 2002, the revived and renamed business was acquired by retail entrepreneur Philip Green, whose portfolio already included rival Bhs. Green engineered a dynamic return to form, building Topshop into one of the UK's most fashionable chain brands, and expanding its presence into other markets, most recently the US. Although both owned by Green, Arcadia and Bhs remained separate businesses until summer 2009. In 2015, Green sold the now ailing Bhs to a consortium of investors.

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Brands

Burton Top Man
Dorothy Perkins Miss Selfridge
Topshop Evans
Wallis Outfit

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 8th Jun 2017: Financial results for Sir Philip Green's Arcadia retail empire, just filed with UK regulators, show that Bhs was not the only chain in the group to have suffered a slowdown in performance last year. For the period to August 2016, Arcadia's first full year after selling Bhs the previous April, pretax profits slumped by almost 80% to just £36.8m. That included a £129m charge for costs associated with the Bhs sale and the ensuing PR scandal. Group turnover was down 17% to £2.02bn, reflecting the sale of Bhs, but also slippage among the group's remaining retail brands. Separate accounts for Topshop/Topman, which is part-owned by investment group Leonard Green & Partners, reported a 2% decline in turnover to £991m and a 22% fall in pretax profits to £84.6m.

Adbrands Weekly Update 30th Mar 2017: Mary Homer, managing director of Arcadia's Topshop division, is to leave the company after 30 years to head online and mail order home furnishings retailer The White Company. It is the latest challenge to befall Sir Philip Green's retail empire, in which Topshop is the undisputed crown jewel. Trade bible Drapers ranked Homer as the 20th most influential person in UK retail in 2016, only two places behind Green himself.

Adbrands Weekly Update 2nd Mar 2017: British fashion tycoon Sir Philip Green finally agreed to do the right thing in relation to failed clothing chain Bhs, which collapsed in 2016 after Green sold it for next to nothing to a would-be entrepreneur with no retail experience. Green had extracted payments in excess of £1.4bn from the company in the early and mid 2000s, but when Bhs failed 11,000 employees lost their jobs and thousands more were left with a gaping £570m hole in their pension fund. The tycoon, who had at the time just taken delivery of his second multi-million pound super-yacht, was put under intense pressure to plug that hole, but appeared to be dodging that moral responsibility. The public row culminated in a vote by British MPs to recommend the "billionaire spiv" be stripped of his knighthood. After ten months of tough negotiations with the Pensions Regulator, Green has now paid £363m into the Bhs pension fund to settle his moral responsibility for the fiasco. The regulator has in return dropped legal proceedings and declared itself "satisfied" with the outcome. His willingness to dig into his own pocket to make good set a new precedent for any UK businessman, for which Green deserves some credit. But in reality, the sheer weight of public and political pressure on him to do so made any refusal all but impossible.

Adbrands Weekly Update 27th Oct 2016: British MPs voted unanimously to recommend that Arcadia chairman Sir Philip Green - described by one as a "billionaire spiv" - be stripped of his knighthood as a result of the sale of retail chain BHS to an inexperienced buyer and its subsequent collapse. A string of MPs from different parties addressed the House of Commons to voice their condemnation of Green's actions, which resulted in the loss of 11,000 jobs and a huge shortfall in the chain's pension fund. Although Green promised in June to "sort" the financial impact of BHS's collapse on its employees and pensioners, no concrete proposal has yet been made. MPs have no direct influence over the honours system, but their motion will be taken under consideration by the relevant committee. Green responded by publishing legal opinion sought from two leading barristers which called the Commons debate "unfair" and "biased".

Adbrands Weekly Update 16th Jun 2016: Topshop owner Sir Philip Green was subjected to a marathon six-hour interrogation by the parliamentary committee looking into the collapse of BHS, part of Green's Arcadia Group until 2015. He delivered a robust and confident performance, but admitted his sense of shared responsibility in the chain's downfall. "I spent 15 years — a third of my professional career — at BHS and, if anything, I had too strong an emotional tie to it. I apologise to all of the BHS people and hope to find a sensible solution.... Nothing is more sad than how this has ended." He refused to accept allegations made by BHS's final owner Dominic Chappell that he had in effect caused the chain to call in administrators by blocking its sale to another High Street rival, Sports Direct. However he did acknowledge that he contributed to its failure by selling it to Chappell, a would-be entrepreneur with no retail experience. "I believe if the business plan had been followed, BHS would not have gone out of business.... I picked the wrong guy." The key issue, though, is how to plug the failed chain's £571m pension deficit. "It is resolvable, sortable, and we will sort it," Green told MPs. "I want to give assurance to the 20,000 pensioners that I am there to sort it... You have my commitment that I am planning to sit down with the pensions regulator. Trust me, I want to get this over quicker than you do."

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Background

Free for all users | see full profile for current activities: Burton's was originally founded in 1904 by Moshe Osinsky, a Jewish refugee from Lithuania who had arrived in the north of England a few years earlier. Osinsky changed his name to Montague Burton, and opened a tailor's shop in Chesterfield. By 1910, he had 14 shops in and around Sheffield and Leeds. On the outbreak of World War I, the company secured a huge government contract to supply army uniforms, and prosperity continued into the early postwar period. Business boomed as recently demobbed soldiers created a huge market for everyday men's clothing. By the early 1920s, sales had grown to over £1m, and the company floated in 1929. Those additional funds paid for further expansion and by the 1930s Burton was a household name throughout the country. The business continued to expand until there were more than 600 outlets nationwide by the late 1940s. By the time its founder, now Sir Montague Burton, died in 1952 the company was the world's largest menswear retailer. 

In 1946, Montague Burton had also moved into the womenswear market, acquiring the Peter Robinson fashion chain. In 1964, Peter Robinson launched a spin-off chain, Top Shop, targeting fashion-conscious "swinging 60s" women. The company, now Burton Group, continued to expand into different niche areas, acquiring outsize fashion chain Evans in 1971 and Dorothy Perkins (founded in 1919) in 1979. In the 1980s, Principles was launched to provide fashionable clothes for working women. However the hostile takeover of department store giant Debenhams in 1985 after a bidding war against Mohamad Al-Fayad, along with speculations in the property market, finally stretched the group too far. Performance slumped in the recession of the early 1990s. Harvey Nichols, acquired as part of Debenhams, was sold in 1991. In a bid to extend its coverage the group moved into mail order mid-decade, acquiring Innovations (later sold to GUS), Hawkshead and Racing Green. In 1997, the decision was taken to demerge Debenhams as an independent company, a process completed a year later. The main business rebranded at the same time as Arcadia Group. Although the group regained its stability in the early 2000s it was increasingly identified as a takeover target.

A brash and aggressive self-taught businessman, Philip Green had first made his name in the fashion industry during the 1980s, buying and selling the Jean Jeanie denim retail chain at a huge profit before mounting a takeover of quoted discount clothing retailer Amber Day towards the end of the decade. Forced out of that company by shareholders in 1992 as a result of a downturn, Green began a new career as a corporate raider, buying a series of different struggling chains, turning them around and selling them on at a handsome profit. He made his first acquisitions in 1994, department store chain Owen Owen and discount menswear chain Mark One. Over the next few years he picked off a series of other chains from the ailing Sears fashion group, which was steadily divesting its huge portfolio of different UK stores. 

In 1997 and 1998, Green acquired Olympus Sports and Shoe Express from Sears, turning them around and then selling them on to other owners. In 1999, after a brutal takeover battle, he acquired for a knockdown price what remained of Sears, including mail order giant Freemans, and chain stores Wallis, Miss Selfridge, Warehouse, Richards and Adams. Over a matter of months, all these too were sold on, earning Green an estimated £180m profit. Freemans was sold to Otto Versand of Germany, Adams to management, and the Sears womenswear chains to Arcadia. This left Green free to pursue a new target. After making a first tentative run at Marks & Spencer, he set his eyes instead on another legend of the British high street, Bhs. 

Bhs had been founded in the late 1920s as British Home Stores, a single outlet in south London selling a variety of home products and clothing, with all goods priced at less than a shilling. In 1931 the business went public and expanded steadily, eventually abandoning its low-price policy after World War II in favour of well-made but still affordable clothing. In 1986 the company was acquired by Terence Conran's Habitat Mothercare group to form Storehouse, and was relaunched under the name Bhs, the acronym by which it was already widely known. However Storehouse struggled to compete with other retailers and, following a series of boardroom battles, was broken up in 2000. Green's offer of £200m for Bhs included more than £50m of his own money, and he was able to engineer a dramatic turnaround of the business in just 18 months, tripling profits, and making himself another fortune in the process. 

That success earned Green new respect in the business community, giving him greater freedom to make even more ambitious acquisitions. Now he turned his attention back to Arcadia. Despite a considerable improvement in performance since the early 1990s under new CEO Stuart Rose, Arcadia was effectively considered to be in play after fighting off a takeover bid from Icelandic retail group Baugur. The company had already restructured its portfolio, having spun off several brands, including Warehouse and Principles, into a joint venture with managers under the name Rubicon Retail. After a series of to-and-fro bids during the summer of 2002, Green finally won over Arcadia's shareholders with an offer worth £850m. He sold off the group's remaining shares in Rubicon following the successful takeover.

Two years later he mounted a new raid on Marks & Spencer, now under the management of former Arcadia chief Stuart Rose. After several months of occasionally angry sparring with the M&S board, Green abruptly dropped his takeover bid in summer of 2004. (See Marks & Spencer profile for details). See full profile for current activities


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