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Arcadia collapse caps downfall of king of the High Street Sir Philip Green

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Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·8-min read
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File photo dated 17/09/17 of Sir Philip Green. The retail bloodbath has continued apace as the John Lewis Partnership warned over store closures and job cuts and Sir Philip Green's Topshop empire also revealed redundancy plans.
Sir Philip Green. Photo: PA

The collapse of Arcadia marks the final chapter of Sir Philip Green’s reign as king of the High Street.

Green bought Arcadia, the owner of brands like Topman, Dorothy Perkins, and Burton, in 2002 as part of a string of deals that helped make him the fastest £1bn ($1.3bn) in British history.

On Monday evening, Arcadia officially filed for administration, a form of bankruptcy, after last minute rescue talks failed. The move leaves the fate of Arcadia’s roughly 500 stores and 13,000 employees hanging in the balance.

READ MORE: TopShop-owner Arcadia collapses with 13,000 jobs on the line

Green’s changing fortunes — and reputation — have been catalogued over the years. The retail tycoon has faced charges of mismanagement, accusations of sexual misconduct (which were later dismissed by a judge and which he has always vigorously denied), and been dubbed the “unacceptable face of capitalism.” The collapse of Arcadia may well be his rock bottom.

There are two defining books about Green that encapsulate his rise and fall.

When the first unauthorised account of his life was published in 2006, it was titled Top Man.

Just over a decade later when Sunday Times business editor Oliver Shah wrote the story of BHS’s collapse, in which Green was intimately involved, he titled the book Damaged Goods. Green was on the front cover.

General view of a TopShop and TopMan branch in Oxford Circus, London. The chains form part of the Arcadia group. Picture date: Thursday May 23, 2019. Photo credit should read: Matt Crossick/Empics
General view of a TopShop and TopMan branch in Oxford Circus, London. The chains form part of the Arcadia group. Picture date: Thursday May 23, 2019. Photo credit should read: Matt Crossick/Empics

Green was born in Croydon in 1952 but spent much of his childhood in North London. He dropped out of the private boarding school he attended aged 15 and began to work his way up in the world of retail. Green set up several ventures of his own before becoming the boss of listed discount chain Amber Day in 1988. He left in 1992 after the business missed profit targets.

Green’s reign as king of the High Street really began in 2000 when he masterminded a £200m takeover of BHS. Two years later he bought Arcadia for £850m through his family business vehicle. In both of these deals, Green acquired once strong brands that had become dusty and tired. He helped to reinvigorate them.

In 2004, Green came close to buying Marks & Spencer — a long-time target of his. M&S ultimately avoided his grasp.

British Prime Minister Tony Blair (right) talks to Arcadia boss Sir Philip Green during a visit for the official opening of the Fashion Retail Academy in central London. PRESS ASSOCIATION Photo. Picture date: Tuesday October 31 2006. Sir Philip Green today offered Tony Blair a job when his premiership ends - in the fashion industry.The Arcadia boss made the proposition as the Prime Minister attended the opening of the Fashion Retail Academy's new buildings in central London. See PA story POLITICS Blair. Photo credit should read: Fiona Hanson/WPA rota/PA.
British Prime Minister Tony Blair (right) talks to Arcadia boss Sir Philip Green during a visit for the official opening of the Fashion Retail Academy in central London on October 31 2006. Photo: Fiona Hanson/WPA rota/PA.

The string of dealmaking made Green and his family fabulously wealthy. In 2005, Arcadia paid out a £1.3bn dividend — the biggest in British history and more than four times the company’s annual profits.

£1.2bn went to Sir Philip’s wife Tina, who officially owns Arcadia and lives in the tax haven of Monaco.

Sir Philip and his wife spent lavishly. A toga party for Green’s 50th birthday became the stuff of legend. Sir Philip reportedly flew 200 friends to Cyprus and hired Rod Stewart and Tom Jones to perform. In 2005, he is said to have spent £4m on his son’s bar mitzvah where Beyonce performed, according to the Guardian.

“Years ago, Philip Green was a name that was really only known in retail,” said an industry insider who knew Green in his early years. “He discovered celebrity and he loved it. He rode that wave.”

The 2005 dividend raised eyebrows at the time and the tax arrangements of Sir Philip and his wife drew the ire of campaigners and opposition politicians.

Still, in 2006 then Prime Minister Tony Blair recommended Green for a knighthood for services to retail.

Super model Kate Moss and Top Shop owner Philip Green watch the Fashion for Relief charity fashion show in London September 20, 2007.      REUTERS/Kevin Coombs    (BRITAIN)
Super model Kate Moss and Top Shop owner Philip Green watch the Fashion for Relief charity fashion show in London September 20, 2007. Photo: REUTERS/Kevin Coombs

These were the boom years for Arcadia. Topshop and Topman were the defining High Street brands of the first decade of the century. Kate Moss, Britain’s most famous model, launched a signature line of clothing for Topshop in 2007.

That same year, Sir Philip’s personal fortune reached its apex near £5bn, according to the Sunday Times Rich List.

But as the second decade of the 21st century arrived, things began to sour.

New trends were emerging in retail. “Fast fashion” retailers like Uniqlo and Zara were on the rise, as were online-only shops such as Asos and Boohoo. In the aftermath of the financial crisis, ultra-low price clothing shop Primark rose to prominence.

Arcadia struggled to compete. Dr Jonathan Reynolds, associate professor in retail marketing at Oxford Saïd Business School, said the company “made no real plans” for online sales in the early 2010 and failed to invest in its stores “at a time when competition was intense and innovative new players entered the market”.

The record-breaking £1.3bn dividend Arcadia paid in 2005 was funded through a seven and a half year loan. Paying that back hamstrung the company’s ability to invest.

“Arcadia’s been in decline for many, many years,” said Richard Hyman, a veteran retail industry analyst. “Aside from TopShop, the brands had peaked some years before he’d bought them twenty years ago.”

By 2015, Arcadia’s was still making annual sales of £2bn but the company was losing £90m a year. That same year Green began to dismantle his empire, offloading the underperforming BHS for £1 to a man named Dominic Chappell, an ex-bankrupt and former racing driver.

That deal was the beginning of the end for Green. BHS collapsed in early 2016 with a more than half a billion pound hole in its pension scheme. Chappell ultimately went to prison for tax avoidance linked to the deal and Green faced questions over his stewardship prior to BHS’s sale.

Protesters let by musician Homesick Mick (third right) outside Topshop in Oxford Circus, London, demonstrate against Sir Philip Green in a campaign called #phillipfreefriday asking shoppers on Black Friday to boycott his stores in an effort to persuade the billionaire to pay the lost BHS pensions back to his former staff.
Protesters let by musician Homesick Mick (third right) outside Topshop in Oxford Circus, London, demonstrate against Sir Philip Green in a campaign called #phillipfreefriday asking shoppers on Black Friday to boycott his stores in an effort to persuade the billionaire to pay the lost BHS pensions back to his former staff. Photo: PA

A parliamentary inquiry concluded Green had left BHS “on life support” after extracting huge dividends. MPs dubbed him the “unacceptable face of capitalism” and backed a non-binding resolution calling for Sir Philip to be stripped of his knighthood.

Footage of Green angrily confronting a Sky News reporter who tracked him down to his super yacht in Greece came to define the BHS story. While Green was floating in the ionian sea, over 10,000 BHS staff had lost their jobs and feared their pensions could be missing.

Sir Philip engaged in a public war of words with Labour MP Frank Field but ultimately agreed to pay £363m into the BHS pension scheme to end the scrutiny of his role in the collapse.

Sir Philip Green gives evidence to the Business, Innovation and Skills Committee and Work and Pensions Committee at Portcullis House, London, on the collapse of BHS.
Sir Philip Green gives evidence to the Business, Innovation and Skills Committee and Work and Pensions Committee at Portcullis House, London, on the collapse of BHS. Photo: PA

Just as the corporate crisis was waning, a personal one was emerging. In 2018, the Telegraph splashed on what it called “The British #MeToo Scandal that cannot be revealed”. The paper said allegations of sexual harassment and racist abuse by a leading businessman were being blocked by an injunction. The legal challenge was ultimately abandoned after an MP used parliamentary privilege to name Green as the businessman in question. Green denies the accusations.

In May 2019, Green was charged with four counts of misdemeanour assault in the US over allegations he inappropriately touched a pilates instructor in Arizona. Green denied the charges. Prosecutors dropped the case in January of this year.

The string of professional and personal crises has left Green’s reputation in tatters. Earlier this year Steve Coogan played a fictional retail mogul based on Green in the film “Greed.” Like Green, Coogan’s character hosts a toga-themed birthday party and reaps a £1.2bn dividend. Coogan’s character makes his money through asset stripping, tax avoidance, and sweatshops.

Steve Coogan in the film Greed. Photo: YouTube/Screenshot/Sony Pictures
Steve Coogan in the film Greed. Photo: YouTube/Screenshot/Sony Pictures

As his reputation has declined, so has Green’s wealth. The most recent Sunday Times Rich List puts his family wealth at £930m, down £20m on the prior year and a far cry from his £4.9bn peak.

The collapse of Arcadia will no doubt further dent Sir Philip’s finances and reputation.

“The mistakes that Philip made with BHS, he’s made with Arcadia,” Hyman said. “He could have sold BHS as a going concern in a conventional transaction some years before. He could have sold Arcadia in a conventional transaction some years before this.

“He has many, many strengths and talents but among them is not listening to other people and it’s not strategic thinking. The writings been on the wall.”

Arcadia’s administration may not provide a clean exit for Green. As with BHS, he faces questions around the company’s pension scheme, which has an estimated £350m funding deficit.

Stephen Timms MP, chair of parliament’s work and pensions select committee, wrote to the chief executive of The Pensions Regulator on Monday urging him to put the interests of Arcadia pensioners “front and centre” and asking “what lessons will you be applying” from the BHS saga?

“I think this is the beginning of the end, not the end itself,” said Hyman.