Arcadia Group, the British retail empire that has been run by the billionaire Philip Green for 18 years, was placed into a type of bankruptcy protection on Monday, a decision that effectively puts around 13,000 jobs at risk.
In another blow to the country's retail industry in the run-up to the crucial Christmas trading period, the owner of such brands such as Topshop, Dorothy Perkins and Miss Selfridge, said it had called in administrators from Deloitte. The move protects Arcadia from creditors while a buyer is sought for all or parts of the company.
"This is an incredibly sad day for all of our colleagues as well as our suppliers and our many other stakeholders," said Ian Grabiner, Arcadia's chief executive.
"The impact of the Covid-19 pandemic, including the forced closure of our stores for prolonged periods, has severely impacted on trading across all of our brands," he added.
Arcadia is arguably the biggest name to have been hammered by the closure of stores during the pandemic, with rivals in Britain including Debenhams, Edinburgh Woollen Mill Group and Oasis Warehouse all sliding into insolvency.
Analysts have said that the pandemic hasn't been solely behind the company's woes. Like other long-established retail outlets in British town centers, Arcadia has faced increased competition from low-cost rivals like Primark, as well as from online disrupters such as ASOS and Boohoo.
Critics have also said that the 68-year-old Green, who has been embroiled in a series of controversies over the past few years, hasn't invested enough in the businesses to get them in shape to deal with the new competition in retail.
"Arcadia has suffered against these emerging players because the company was slow to develop an innovative and user-friendly online offering as well as a strong brand narrative and social media presence," said Nina Marston, fashion and luxury analyst at Euromonitor International.
There was no immediate announcement of layoffs or store closures.
"We will now work with the existing management team and broader stakeholders to assess all options available for the future of the group's businesses," said Matt Smith, joint administrator at Deloitte.
Smith said the intention is that all the brands will continue to trade when stores reopen in England on Wednesday.
England is in a four-week lockdown that has forced the closure of all shops selling items deemed to be non-essential. The lockdown expires on Dec. 2 and shops will be allowed to reopen. The other nations of the U.K. — Scotland, Wales and Northern Ireland — have taken slightly different approaches but all have at various stages reimposed restrictions that closed non-essential shops.
"We will be rapidly seeking expressions of interest and expect to identify one or more buyers to ensure the future success of the businesses," Smith said.
For the past couple of decades, Green has been one of the most influential executives in European retailing. He bought Arcadia in 2002 and subsequently came close to taking over Marks & Spencer, too.
His no-nonsense attitude won him admirers and helped his brands to link up with the likes of supermodel Kate Moss and singer Beyonce.
But a series of scandals over the past few years tarnished his reputation and led to calls for him to be stripped of the knighthood that Queen Elizabeth II awarded him in 2006.
For many, his high pay came to symbolize the excesses of the corporate world, especially when his brands were in need of investment. And a slow response to the consumer shift to online shopping meant the brands failed to keep up.
It was after the global financial crisis of 2008 that the underlying problems with his businesses really started to show, especially after his decision to sell BHS, a fixture on British high streets for decades, for just 1 pound to struggling entrepreneur Dominic Chappell.
About a year later, BHS collapsed, costing 11,000 people their jobs and leaving a pension deficit of around 571 million pounds ($760 million). Though Green subsequently paid hundreds of millions into the pension, his reputation never recovered. Chappell, meanwhile, was this month sentenced to six years in jail for tax evasion during his time running BHS.
Earlier on Monday, Frasers Group, which is run by Green's long-time rival Mike Ashley, said an offer for a 50 million-pound lifeline for Arcadia was rejected and lawmakers sought to ensure that Arcadia's pension scheme was protected. There are fears that there is a 350 million-pound black hole in Arcadia's pension.