Sir Philip Green’s excessive road empire is taking pressing steps to slash its rent invoice because the COVID-19 pandemic threatens to decimate elements of Britain’s retail sector.
Sky News has learnt that Sir Philip’s Arcadia Group, which owns TopShop and Dorothy Perkins, approached landlords this week to tell them that it’s going to not pay at the very least a part of a multimillion pound invoice that falls due subsequent week.
One property business supply mentioned the corporate had additionally raised the prospect of cuts of as a lot as 50% on rent offers that have been themselves slashed final 12 months below an settlement with collectors.
The discussions between Arcadia executives and landlords make Sir Philip’s firm the newest in a lengthening line of shops looking for presents to preserve money forward of a expensive week for the excessive road.
Employees are resulting from be paid, together with rent and tax payments that are due subsequent week, and retailers together with B&Q-owner Kingfisher and Superdry are amongst these which is able to refuse to make a few of these payments as they resist prolonged retailer closures.
Like a lot of its rivals, Arcadia has seen catastrophic falls in gross sales throughout its manufacturers this week as shoppers have abandoned vogue retailers.
Sir Philip’s companies make use of about 18,000 folks, making his operations one of many UK’s largest privately owned employers.
One supply mentioned its precedence was to make sure that workers have been paid as they’re confronted by a excessive road shutdown that might final many weeks.
Arcadia, which made billions of kilos for Sir Philip and his household, was already struggling earlier than the coronavirus outbreak.
He narrowly secured collectors’ assist for a rescue of Arcadia final June, with landlords agreeing to again a Company Voluntary Arrangement (CVA) on the second try.
The withholding of, or savage reductions to, subsequent week’s rent payments will even heap additional distress on the elements of the ailing business property sector which act as landlords to the most important retailers in Britain.
Last 12 months’s rescue deal noticed Sir Philip’s spouse, Lady Tina Green, agreeing to inject £175m into Arcadia’s pension scheme over a three-year interval, with safety over an extra £210m of belongings additionally being granted to it.
In return, Arcadia signalled its intention to shut dozens of shops and cut back rents at a whole bunch extra.
As effectively as Top Shop, Arcadia homes chains together with Miss Selfridge and Burton – all of which have been hit by shifting habits amongst consumers and rising shopper warning.
It has been a tumultuous interval for Sir Philip, who for years was feted because the king of the excessive road by politicians and the media however who did not get better his poise after the collapse in 2016 of BHS.
His sale of the division retailer chain a 12 months earlier to Dominic Chappell, a former bankrupt, culminated in Sir Philip having to contribute greater than £360m to fund its pension deficit after its collapse.
The scale of the problem dealing with Sir Philip as he tries to save lots of Arcadia was underlined in September when it reported a £170m full-year loss.
As a part of the reorganisation of his firms, Sir Philip paid $1 to purchase again his personal fairness associate’s 25% stake in Topshop and Topman.
He was additionally pressured to sweeten the phrases of a proposal to US-based collectors as he closed Top Shop’s retailers there.
The tycoon’s depressing interval has not solely been restricted to the efficiency of his enterprise.
Sir Philip additionally grew to become embroiled in a storm over his behaviour in direction of Arcadia staff and his use of non-disclosure agreements to stop former employees discussing their severance packages.
Arcadia declined to remark.