Is Philip Green Going to Take it on the Chins? Will John Lewis Sell Broccoli?

Posted on Nov 15, 2020. by NTI

As the latest autumn storm rakes its way across the abdomen of the British Isles there seemed to be a slash of blue in the headline in the business section of The Sunday Times this morning (15 November); ‘Topshop Owner on the Brink’ it yelled promisingly. 

It turns out that it is the directors of Arcadia who are drawing up plans with Deloitte for an Administration of the company that employs more than 15,000 poor souls across 550 sites. Just when to was possible to believe that Sir Philip had fallen out of his size four suede and tasselled Gucci loafers, slipped on the grease from his own hair, hurtled across the floor of one of his stores and come to rest in a pile of cheap and nasty 80% polyester suits ... it turns out the bad news once again surrounds his colleagues. 

Arcadia owns Topman, Miss Selfridge, Burton, Dorothy Perkins, Wallis and Evans, all brands that clad your great-grandparents as they emerged from smog enclouding mills and pits, and have become less durable and stylish since. The group staggered into lockdown and has since lost ground to online competitors, such as Asos and Boohoo. The Pensions Regulator is reported to be limbering up for a rematch with the oleaginous Green, who emerged from their last scrap in 2015 having to pump £363 million into BHS. 

To win the vote of the Pension Protection Fund for a restructuring in 2019, Arcadia granted its scheme security over its Topshop flagship on London’s Oxford Street and Corinthian House, a nearby office building. Green is understood to be closing in on a sale of Corinthian House for about £70 million, which would result in a modest contribution to the pension fund once the mortgage is paid off. Another player in this plot against fashion retail is Green's wife, Tina, who is the registered owner of Arcadia. She gave an interview to the Guardian in 2016 describing the time she first met her husband at a party in 1985, thinking he was "dreadful". She's right. We didn't read the rest of the article - there was no need.

In short Arcadia need a loan of around £30 million to keep afloat until Christmas. Earlier this year Forbes reported that Phil and Tina's net worth was around £2.1 billion (although they could have been rounding down). To allow you a sense of perspective as you baste your chicken out of the oven ahead of lunch today, the amount the business needs is 1.5% of this personal fortune. If you earn £30,000 a year you would be giving £450 of your annual income to save your business. Would you do that? Maybe you would if you were Tina Green, waking up in Monaco this morning, having extracted a £1.2 billion tax-free dividend in 2005. She can't have spent it all, can she?

 Maybe Phil Green, judging by the number and sheer size of his chins, could have spent a fair chunk of that dividend at Greggs, who this week reported that they have to shed another 800 jobs. Roger Whiteside, chief executive of the lunchtime favourite said that the bakery chain "will not be profitable as a business" if sales continue at the rates they have been in lockdown. 

This story was not connected with the one about the link between obesity and deaths from Covid-19, but maybe it should have been. Obesity is defined as a body mass index greater than 30 and raises the risk of dying from the Coronavirus by 48 per cent. Dame Sally Davies, the former health chief, blames the UK's high death toll on a "structural environment" that enables junk food makers to encourage consumption. Greggs new 'Christmas gift to you', their Pigs Under Blanket Baguette weighs in with 18 grams of fat and 2.5 grams of salt, which could be bullied into submission by McDonalds' new Christmas offering of four Canadian beef patties, providing 730 calories under the auspices of a 'Double Big Mac'.

This in the week that Marks & Spencer reported its first loss as a public company in 94 years. The store fell to a £87.6m pre-tax loss for the 26 weeks to September 26, that compared to a £158.8 million profit from the same period last year. They could learn from The Range, owned by Chris Dawson, that has been allowed to stay open in England because it also sells items such as groceries and toilet roll. These are deemed 'essential' and it raises the question as to whether John Lewis and our old mate Debenhams should stick some loo rolls and broccoli by the front door of all of their stores, allowing us all to bypass them and buy a tumble dryer and some socks.

Happy Sunday.


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