A report has emerged today that Sir Philip Green is considering all or part of his Topshop-to-Burton Arcadia fashion empire with Chinese textiles group Shandong Ruyi among the interested parties.
According to The Sunday Times, a team from Shandong Ruyi had visited Arcadia’s London headquarters to run the rule over the business, which includes Topshop, Topman, Miss Selfridge, Evans, Burton, Dorothy Perkins, Outfit and Wallis.
However in a statement sent to The Industry the Chinese group said it was “not the case” that it will soon acquire the Arcadia Group.
Shandong Ruyi has, however, made clear that is has ambitions to become a global fashion player and has rapidly been buying up European brands in recent years. The business already owns a majority stake in French premium fashion group SMCP (Sandro Maje Claudie Pierlot) and Japan’s Renown, along with British brands Aquascutum, Gieves & Hawkes and Kent & Curwen.
Most recently it acquired Swiss luxury brand Bally from JAB Luxury , a deal which Shandong Ruyi chairman Yafu Qui said was “an important milestone for Shandong Ruyi Group in our enterprise to become a global leader in the fashion apparel sector.”
The report also suggests that Green has been seeking a buyer for Arcadia for some time and has also held talks with US brand group Oxford Industries, which have now ceased. He had also been discussing the possibility of whether he could extract flagship brand Topshop from the stable and dispose of the remaining businesses. However, not only would that make Arcadia less attractive to potential buyers, it may lead to issues with Arcadia pension trustees and the pensions regulator since Arcadia has a hole in its pension fund.
Green agreed to pay £363m into the pension fund of BHS last year after the retailer had collapsed in 2016, just one year after he sold it to former bankrupt Dominic Chappell for just £1.
The timing for a deal would make sense since private equity house Leonard Green has held a 25% stake in Topshop since 2012 and the agreement allows for either side to float or sell the business after five years. And, should Green elect to sell, it would bring to a close a remarkable 50-year career in fashion retail in which he has been one of the most prominent figures on the high street.
Green began his career in fashion at the age of 21 buying jeans from the Far East and selling them to UK retailers. He went on to become chairman of listed discount chain Amber Day in 1988 but left in 1992 after a series of profit warnings.
He carried out deals to buy Sears and Olympus in the 1990s and in 2000 he acquired BHS, followed by Arcadia in 2002, and subsequently signed over ownership to his wife Tina Green, a resident of Monaco. Green made two hostile bids for Marks & Spencer during his career, one in 1999 and one in 2004, which famously led to a fight with fellow retail chief Stuart Rose, who had sold the Arcadia chain to Green.
Rose, now Lord Rose, had turned down an offer to form part of Green’s 2004 bid team and instead accepted an offer from M&S to join the business as CEO. Green’s £8bn offer was turned down and he had apparently grabbed Rose by the lapels and shouted at him as Rose arrived for work one day. However the altercation apparently ended with both men laughing, though a friendly rivalry was established.
Arcadia has struggled in recent years to keep pace with the rapid change on the high street along with the onslaught of competition from online rivals such as Boohoo and ASOS (it is rumoured that Green had made overtures to buy AIM-listed ASOS in the mid-2000s but was turned down).
It was recently revealed that Arcadia had contacted its suppliers to request a 2% discount on orders from this month, a move which followed the news that Arcadia parent company Taveta Investments had recorded a 16% drop in profits to £211m in the year ending August 2016, along with a drop in sales of 2.5% to just over £2bn. It is believed the performance has deteriorated since then.
Despite the controversies and his famously volatile temper, Green has also contributed much to the industry through his charitable endeavours. He was instrumental in the establishment of the Fashion Retail Academy in central London, which aims to create the next generation of retail talent, and a major supporter of The Retail Trust charity.
Topshop has also helped support the careers of a large number of British fashion designers through its support of the British Fashion Council’s NEWGEN scheme and its sponsorship of designer incubator Fashion East.
Green was awarded a Knighthood by then Prime Minister Tony Blair in 2006.
This story was updated on 19 February to include the comment from Shandong Ruyi that it was not planning to buy the Arcadia business.